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SETC Tax Credit Qualification Explained
SETC Tax Credit: Detailed Guide to Qualification for Self-Employed Individuals
The Self-Employed Tax Credit (SETC), as part of the Families First Coronavirus Response Act (FFCRA), is a significant relief measure designed to assist self-employed individuals financially impacted by the COVID-19 pandemic. By providing financial relief in the form of refundable tax credits, the SETC aids freelancers, gig workers, and independent entrepreneurs make up for lost revenue due to personal illness, quarantine, or the need to care for others.

This comprehensive guide will help you understand the detailed qualification criteria for the SETC, how to apply for the credit, and steps to guarantee you maximize your claim.


Understanding the SETC Tax Credit
The SETC, launched via the FFCRA and later expanded through additional COVID-19 support laws, was designed specifically to address the needs of independent workers who do not have access to company-sponsored sick leave or paid family leave. SETC tax credit relief for freelance voice-over artists compensates independent contractors who were unable to work because of COVID-19-related circumstances, whether from sickness or because they were caring for others suffering from the virus.


Who Qualifies for the SETC?
Self-Employment Requirement

To be eligible for the SETC, you must be considered self-employed, which encompasses:


Contract-based workers, gig workers, and gig workers
Business owners with no employees
Partners in a business or members of a Limited Liability Company (LLC) treated as a sole proprietorship for tax purposes

You must have filed Schedule SE with your IRS Form 1040 for the 2020 or 2021 tax year, indicating your self-employment income. Even those with part-time independent work can qualify, as long as they comply with the income criteria and can prove lost earnings.

2. COVID-19 Impact

The SETC is designed for those who couldn’t work because of COVID-19-related issues, and this applies to:


Quarantine or Isolation: If you were required to isolate due to a local, state, or federal quarantine order.
Health Issues Due to COVID-19: If you were tested positive for COVID-19 or showed symptoms that stopped you from working, you qualify for the credit.
Providing Care for Someone: If you were unable to work because you were responsible for caring for someone affected by COVID-19, or if childcare or schools were shut down because of COVID-19, you can claim the family leave portion of the SETC.
School or Daycare Closures: If pandemic-related closures of schools or childcare facilities impacted your ability to work, you are eligible for the family leave portion of the credit.


Calculation of the SETC
The SETC is calculated based on your average daily self-employment income and can be filed in two major areas:

Credit for Sick Leave:


You can request 10 days of missed work due to sickness, quarantine, or self-isolation. The limit you can claim is 100% of your average daily income, limited to $511 per day. For those who were out for the full amount of 10 days due to illness, the total credit for sick leave could be as high as $5,110 per tax year.

2. Family Leave Credit:


The family leave credit is intended for those who couldn’t work because they were responsible for someone suffering from COVID-19 or because childcare facilities were closed. In this case, you can claim 67% of your average daily self-employment income, capped at $200 per day. The credit covers up to 50 days in each year, allowing for a maximum family leave credit of $10,000 for 2020 and $12,000 for 2021.

Combined Maximum: Across both the sick leave and family leave credits, self-employed individuals can potentially claim up to $32,220 in total relief across the two years.


Required Paperwork for SETC Claims
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