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False Claims on Social Media
Fraudulent actors on social media are misleading people by claiming that a “self-employment tax credit” is available for the 2023 tax year and urging them to file claims for this non-existent credit.
While legitimate tax credits are currently available for self-employed individuals who were impacted by COVID-19 in 2020 and 2021, the manner in which these credits can be claimed is being misrepresented.
The bad actors are failing to clearly communicate the specific requirements and limitations of these credits, including the maximum amount an individual can receive. Instead, they are attempting to exploit unsuspecting individuals by charging upfront processing fees for fraudulent claims.
The REAL Tax Credits Available to the Self-Employed
The fraudulent actors on social media are misrepresenting a legitimate program that provides tax refunds to self-employed individuals who were adversely affected by the COVID-19 pandemic during the 2020 and 2021 tax years. These refunds are based on how the pandemic impacted their ability to work during this time.
Throughout the pandemic, traditionally employed individuals (W-2 employees) benefited from their employers’ sick and family leave programs. These programs allow employees to take paid time off work when facing special health circumstances, regardless of their existing paid time off balance.
How Do These Tax Credits Work?
Congress sought to extend similar benefits to self-employed individuals who would otherwise have no way to recover lost income if COVID-19 impacted their ability to work.
In most corporations, employee leave is handled by a leave administrator. This administrator is responsible for managing all paperwork, determining eligibility requirements, and often issuing paychecks to employees while they are on leave.
In the case of the “Sick and Family Leave Credits” introduced by Congress, the Internal Revenue Service (IRS) acts as the “leave administrator.” The IRS is tasked with ensuring that eligible applicants receive the funds allocated to them by Congress. The IRS issues these funds via a refundable tax credit.
Who is eligible?
You’re eligible if you qualify as self-employed and you:
- Were subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
- Were advised by a health care provider to self-quarantine due to concerns related to COVID-19.
- Experienced symptoms of COVID-19 and sought a medical diagnosis.
- Were caring for an individual who was subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or had been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
- Were caring for your child if the school or place of care of the child was closed, or the child care provider of such child was unavailable, due to COVID-19 precautions.
- Were obtaining immunization related to COVID-19 or recovering from any injury, disability, illness, or condition related to the immunization.
Can You Really Get $32,220?
While $32,220 is the technical maximum, it’s essential to be realistic about what you can expect to receive.
Income-Based: In many traditional corporations, employees on leave often receive a reduced percentage of their regular pay, with 66% being the most common. Similarly, the amount an individual receives from these tax credits is based on a percentage of their income.
Impact-Based: Corporations typically offer various types of leave, each with its own set of employee benefits. For example, some companies may provide new parents with 3 months of leave at 100% pay, while others may offer a maximum of 1 month at 66% pay for “special sick leave.”
The Sick and Family Leave Credits, commonly known as the SETC Tax Credit, function similarly. The eligibility and amount of the credit depend on your unique circumstances. While it is possible to qualify for both types of leave, which would bring one closer to the technical maximum of $32,220, it is not the norm.
How to Claim the "SETC Tax Credits" if You Qualify:
Claiming the credits requires first determining your eligibility by amending your 2021 tax return and completing Form 7202. We strongly recommend seeking the assistance of a licensed CPA rather than attempting this process on your own.
Our firm has partnered with Pinnacle Minds, a cutting-edge accounting firm staffed by former IRS auditors. They have developed a proprietary online tool that enables self-employed individuals to:
- Determine if the impact they experienced due to COVID-19 qualifies them to receive “SETC Tax Credit” (Sick and Family Leave Credit) funds.
- Calculate their total refund amount by electronically connecting to IRS records to verify their exact entitlement (if eligible).
- Electronically file the necessary paperwork to claim the funds they are entitled to through the Sick & Family Leave Tax Credit (SETC Tax Credit) program.
There is NO APPLICATION FEE or COST TO FILE. Pinnacle Minds’ service fee is due only when you receive your refund.
Conclusion
In conclusion, there is a tax credit available for self-employed individuals who were impacted by COVID-19 in 2020 and 2021. The key components to claiming this credit are ensuring that it is filed correctly and understanding the eligibility requirements.
As with any benefits program, it is crucial to be truthful and accurate in your claim.
Millions of Americans were affected by the pandemic, and if you are among the self-employed individuals who suffered financial losses, you may be eligible for this credit.
The online tool provided by Pinnacle Minds is designed to guide you through the process of meticulously examining every potential eligibility point, ensuring that you don’t miss out on any funds that may be owed to you.
By using this tool and seeking the assistance of a qualified tax professional, you can maximize your chances of receiving the credit you deserve.
We wish you a wonderful and prosperous year ahead!
Additional SETC Tax Credit Resources (Sick & Family Leave Credits)
A dedicated financial consultant with extensive expertise in tax strategies for self-employed individuals including freelancers, gig workers, and independent contractors. With a focus on maximizing tax benefits, Richard expertly guides clients through the nuances of the Self-Employed Tax Credit, ensuring they leverage every available opportunity to reduce their tax liabilities.
