Hey guys, it's Ginny Silver.
And today I want to talk to you about
what I think is going to be the most
overlooked small business tax credit for 2021 income taxes.
This tax credit can be worth
hundreds, up to thousands of dollars.
I think that many of you are going to miss it,
but you number 1 may not know that it exists and
number 2 may not know where to find it.
The American Rescue Plan Act of 2021 granted paid
sick leave and paid family leave not only to
employees of businesses, but also to self employed individuals.
This paid sick leave for self employed
individuals is issued as a tax credit.
You must claim that tax credit on your income
taxes if you qualify in order to receive it.
The IRS States that in order to be eligible,
you must have either been subject to a federal,
state or local quarantine or isolation order related to
Covan 19, or have been advised by a healthcare
provider to self quarantine due to concerns related to
COVID-19, or were experiencing symptoms of COVID-19 and seeking
a medical diagnosis, seeking or awaiting the results of
a diagnostic test or a medical diagnosis of COVID-19
and the individual has been exposed to COVID-19 or
is unable to work pending the results of the
test, or must have been obtaining immunization related to
COVID-19 or recovering from an injury, disability, illness, or
condition related to the immunization.
The qualifying dates that this must have occurred are
between April 1, 2021 through September 30, 2021.
The IRS States that to qualify for paid family
leave, an eligible selfemployed individual must have been unable
to work because of one of the following caring
for an individual who is subject to a federal,
state or local quarantine or isolation order related to
Covan 19, or has been advised by a health
care provider to self quarantine due to concerns of
COVID-19 or caring for a child if the child's,
school or place of care has been closed or
childcare provider is unavailable due to Covain 19 precautions,
or if your loved one was experiencing similar symptoms
and you must have accompanied the individual to obtain
immunization related to COVID-19 or to care for an
individual who is recovering from an injury, disability, illness,
or condition related to the immunization.
Now, selfemployed individuals can also elect to use
the prior year's net earnings for self employment
income to determine the average daily self employment
income for purposes of this credit.
If you choose to do so, this would
be a good choice if your year prior
2020 had a higher net earnings than 2021.
Many of you may be wondering,
does this apply to independent contractors?
The answer here is yes, because
independent contractors are self employed.
Next, make sure that you have some sort of
documentation on hand that substantiates your claim to make
sure that should the IRS ever follow up on
auditing this claim that you have documentation that proves
that you were in fact affected by this.
If you do in fact qualify then the IRS
is going to look@your.net income they're going to take
your net income and divide it by 260.
This is going to equal the day
rate of your average selfemployment income.
They then will utilize that day rate and
multiply it times the number of days that
you qualify to receive a paid sick leave.
As long as that day rate is below the
maximum of $511 then you will receive that times
the number of days that you qualify for which
can be up to a maximum of ten days.
If you qualify for paid family leave because you yourself
were not personally sick but rather you had to stay
home to care for a sick family member then the
IRS is going to choose the lesser of two numbers.
$200 or 67% of your daily net income amount
whichever is less is going to be what they
pay you per day for paid family leave.
After using a professional tax preparer
then they will know about this.
They will file it for you if you qualify.
But if you're someone who is filing your own taxes
using a software such as TurboTax it's going to be
more challenging to locate this and I was surprised how
hidden this actually was in TurboTax so I'm going to
show you exactly where you can locate it.
Now the version that I'm showing is
the small business TurboTax online version.
You are going to open up your deductions and credit section
and then you're going to scroll down and click continue up
at the top above income and expenses you're going to click
on deductions and credits down in the menu you're going to
see tax relief related to covid 19 on the right hand
side next to selfemployed sick leave you're going to click Start
software is going to walk you through a series of simple
questions and then at the end you will be able to
see your credit amount.
Okay guys so if you qualify for this make
sure that you claim it's because if not you
are walking away from hundreds to thousands of dollars
that you are entitled to receive.
Let me know in the comments down below if you
knew about this, if you knew where to find it
or if this was your first time hearing it.