The SETC Tax Credit

What is the SETC Tax Credit?

Financial Assistance for Freelancers, Independent Contractors and the Self Employed

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The Self-Employment Tax Credit (SETC) is a federal regulation and U.S. government program designed to provide financial relief in the form of a tax credit to self- employed individuals who have experienced a loss of income due to the COVID-19 pandemic.

This credit can offer you up to $32,220. See if you qualify for SETC.

The SETC tax credit was established to give financial relief to help self-employed individuals like you who work for themselves and who suffered a financial loss in 2021 due to COVID-19 and the effect it had on business.

Who Qualifies for the SETC?

To qualify for the SETC tax credit, you must be self-employed, a freelancer, or an independent contractor who experienced a loss of income or other financial setback due to COVID-19 in 2021.

Examples of Types of Jobs That Qualify Include:

  • Real estate agents
  • Uber / Lyft drivers
  • Freelance designers
  • Photographers
  • Construction workers and many more

For a complete list see who qualifies for the SETC tax credit?.

There are also specific conditions and criteria for eligibility such as the fact you must have earned your income through self-employment.

Calculation of the Credit

The credit is calculated based on a number of factors. A tax professional or SETC credit specialist on our team can tell you if you qualify and can show you how to determine the amount of the tax credit. There are also a number of income loss calculations.

The 2021 SETC tax credit specifically targets income loss in 2021.

How to Claim the SETC Credit

To claim the Credit, eligible individuals have to go through a step by step process and need to use Form 7202 when filing their tax returns. This form helps calculate the credit amount based on the income lost due to COVID-19.

Applying for the SETC tax credit is not as simple as it may sound. You may need assistance, and that is why our team is here to help you get it. See if You Qualify

Important Deadlines

Knowing the key dates for filing and applying for the SETC tax credit is crucial to ensure you don't miss out on this financial aid. Be aware of deadlines for extensions and late applications to avoid penalties. The 2020 deadline has already past, but you still have time to claim your SETC for the 2021 tax year. Start the process now.

Common Mistakes and How to Avoid Them

Frequent errors in applying for the SETC tax credit can delay or reduce your benefit. Follow tips to ensure accurate and complete submissions, avoiding common pitfalls. There are also scammers out there and the IRS recently posted a bulletin about them.

Impact on Tax Returns

The SETC tax credit can significantly affect your overall tax liabilities by reducing the amount you owe. Understanding how this credit integrates with other tax credits and deductions can maximize your tax benefits.

History and Legislation

The SETC tax credit originated from the Family First Coronavirus Response Act (FFCRA) and was extended by the American Rescue Plan (ARP). These legislative changes were made to provide ongoing support for self-employed individuals affected by COVID-19.

Want to Learn More About How to Getthe SETC Tax Credit?

See our FAQ for answers to common questions as well as additional resources and support.

Need Assistance Applying? Call (888) 738-2829 or click here to contact us for help or advice.