The SETC, meaning "Self-Employed Tax Credit," is a financial relief program designed to help self-employed individuals who have been impacted by the COVID-19 pandemic. This reimbursable tax credit, which is not a loan, can provide significant assistance to those who qualify.
To be eligible for the SETC tax credit, you must be a self-employed individual, such as 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 offer up to $32,220 in relief for eligible self-employed individuals. The credit amount is calculated based on your average daily self-employment income and the number of days you were unable to work due to COVID-19. Online SETC tax credit calculators are Click here for more available to help estimate 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's 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 SETC refund is not considered taxable income.
How long does it take to get the SETC refund? It usually takes about 9 weeks for the refund to be processed.
What if I already filed my 2020/2021 tax return?
You are still able to claim the SETC tax credit by filing an amended return.
Self-employed people who have been affected by the COVID-19 pandemic should investigate 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.