The SETC, short for "Self-Employed Tax Credit," is a financial assistance program intended to help self-employed individuals who have been affected by the COVID-19 pandemic. This refundable tax credit, that isn't a loan, can offer significant assistance to those who qualify.
To be eligible for the SETC tax credit, you must be a self-employed person, like a sole proprietor, independent contractor, gig worker, or freelancer. You must have self-employment income reported on your 2020 or 2021 tax return and have been unable to work due to COVID-19 related issues.
The SETC tax credit can give up to $32,220 in relief for eligible self-employed individuals. The credit amount is calculated based on your average daily self-employment More help income and the number of days you were unable to work due to COVID-19. Online SETC tax credit calculators are available to help calculate your potential credit.
To claim the SETC tax credit, you must file Form 7202 with your 2020 or 2021 income tax return. Having all required documentation, including past tax returns, is crucial for the application process. It is important to note that applying for the SETC tax credit does not impact your current year's tax return, as it is a retroactive process.
The deadline for claiming the SETC tax credit for the 2020 tax year is April 15, 2024. For the 2021 tax year, the deadline is April 15, 2025. It is essential to keep these dates in mind when planning to apply for the credit.
Are SETC tax credits taxable?
No, the refund from the SETC tax credit is not taxable.
What is the processing time for the SETC refund? It usually takes about 9 weeks for the refund to be processed.
Is it possible to claim the SETC tax credit after filing my 2020/2021 tax return?
Filing an amended return will allow you to claim the SETC tax credit.
Self-employed workers who have been affected by the COVID-19 pandemic should explore their eligibility for the SETC tax credit, as it can provide substantial financial relief. With deadlines approaching in 2024 and 2025, now is the time to gather your documentation and explore your options for claiming this valuable credit.