How Should an Employer Substantiate Eligibility for Tax Credits for Qualified Leave Wages?
The Families First Coronavirus Response Act (FFCRA) was enacted on March 18, 2020, to help those affected by coronavirus by requiring certain businesses to provide workers who are unable to work or telework due to circumstances related to the coronavirus with paid leave benefits. The act offsets the costs of providing the affected individuals with paid leave benefits through refundable tax credits against employment tax.
Form 7202 is used to figure the amount of the credit an individual is able to claim for qualified sick and family leave due to coronavirus on the 2020 tax return.
- The refundable credit is available to self-employed individuals if they were unable to work or had to care for family members due to coronavirus
- The credit is equal to the amount of paid sick or family leave the self-employed individual would be entitled to (under the Emergency Paid Sick Leave Act or Emergency Family and Medical Leave Expansion Act) if he/she was an employee of an employer (other than him or herself)
Who is eligible?
In order to be an eligible self-employed person the following must apply:
- You are conducting a trade or business as a self-employed individual and;
- You would be eligible to receive paid sick leave under the Emergency Paid Sick Leave Act if you were an employee of an employer, other than yourself and/or;
- You would be eligible to receive paid family leave under the Emergency Family and Medical Leave Expansion Act if you were an employee of an employer, other than yourself.
@Amberhessel
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