Employeed (w2) and also contracted (1099 nec) - stopped contracting work, Qualify for Qualified Family Leave Credit?

[ortizsg]

Hi,

I am employed, have been all of 2020 and got my regular w2.

In 2019 and beginning of 2020, I also was contracted to do work (made almost as much as my salaried job).  Stopped working the contracted job on April 2020 to help my son with his virtual learning during the time I would use for the contracted/freelance work.  

Can i claim Qualified Family Leave Credit for self-employed even though i kept my regular job?

turbo tax led me to it, but I am unsure if i can claim it since i do still have my regular job.  I would have kept the extra contracted job in 2020 had it not been for coronavirus.

[DianeW777 · Accepted solution]

It depends.  Internal Revenue Code Section 1402 defines self-employment as follows, and if you fit this criteria then you qualify.

• The term “net earnings from self-employment” means the gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by this subtitle which are attributable to such trade or business....

If you can show that this independent work was ongoing and that your departure is specifically linked to the oversight and help with your son's virtual learning you are allowed to take the credit.

Qualified Family and Medical Leave Act credit can be reviewed starting with question 30. Under the hyperlink there is more detail for the self-employed. Refer to Question and Answer 60.

For an eligible self-employed individual who is unable to work or telework because the individual:

1. Is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
2. Is caring for a child if the child’s school or place of care has been closed, or child care provider is unavailable due to COVID-19 precautions; or
3. Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor,

The qualified sick leave equivalent amount is equal to the number of days during the taxable year that the individual cannot perform services in any trade or business for one of the three above reasons, multiplied by the lesser of $200 or 67 percent of the “average daily self-employment income” of the individual for the taxable year, or the prior taxable year.

In either case, the maximum number of days a self-employed individual may take into account in determining the qualified sick leave equivalent amount is ten.

Note:  The ONLY days that may be taken into account in a taxable year in determining the qualified sick leave equivalent amount for the year are days occurring during the year and during the period beginning on April 1, 2020, and ending on March 31, 2021.

[ortizsg]

Thank you for your help.

Yes, in 2019 made well over 60k after deductions. 2020 in the ten Ks.

Last logged time was April 4th and haven't billed since then. 

Only proof would be last invoice and an email a few months later to the company's CFO that I didn't log any time the last 2 months because of homeschooling my son.

[DianeW777]

It's clear you have the necessary information should the IRS request it at some future point.  Follow these steps to review your credit

1. Sign into your TurboTax account > Select Deductions and Credits > Scroll to Tax relief related to COVID-19 
2. Select Self-employed family leave credit 
3. Follow the screen prompts and enter the required information.

[ortizsg]

Thanks again!  My regular job [9 to 5] did not suffer though, just my side job that I did after work.   That was my concern.

I filled that out and I qualify.

Thanks 😊