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If you were self-employed during 2021 and faced challenges due to COVID-19, you might be sitting on a financial windfall without even knowing it. The U.S. government provided special tax credits to support self-employed individuals during the pandemic, but these credits didn’t receive widespread publicity. As a result, many eligible business owners never claimed them.
What Are These Credits?
The 2021 COVID-19 Sick and Family Leave Credits were designed to compensate self-employed individuals who were unable to work due to various COVID-related reasons. These credits can be substantial, potentially worth up to $32,220, and are fully refundable—meaning you can receive the full amount even if it exceeds your 2021 tax liability.
Who Qualifies?
To be eligible for these credits, you must have been self-employed for at least some portion of the period from January 1, 2021, through September 30, 2021, and you must have earned a profit from your business. You qualify if you were:
- A sole proprietor
- The owner of a one-member LLC taxed as a sole proprietorship
- A partner in a general partnership
- A member of a multi-member LLC taxed as a partnership
The Four Types of Credits
- Sick Leave Credit (January 1 – March 31, 2021): If you were unable to work or telework due to COVID-19-related illness or quarantine, you could receive up to $5,110 for yourself or up to $2,000 if you were caring for others.
- Family Leave Credit (January 1 – March 31, 2021): If you were unable to work because you were caring for a child whose school or place of care was closed due to COVID-19, you could receive up to $10,000.
- Sick Leave Credit (April 1 – September 30, 2021): This extended sick leave credit covers more COVID-19-related situations, such as caring for someone recovering from a vaccine. The maximum credit is $5,110 for yourself and $2,000 for caring for others.
- Family Leave Credit (April 1 – September 30, 2021): This expanded credit covers up to 60 days of leave for various COVID-19-related caregiving situations, with a maximum credit of $12,000.
How to Claim These Credits
To claim these credits, you need to amend your 2021 tax return by filing IRS Form 1040-X along with Form 7202, which calculates the credits for sick and family leave. The deadline for amending your 2021 tax return is April 18, 2025. However, the sooner you file, the sooner you’ll receive your refund.
Why You Should Act Now
These credits were not widely publicized, so many self-employed individuals and even some tax professionals were unaware of them. This oversight could mean that you’re leaving thousands of dollars on the table. By amending your tax return, you can unlock this financial relief and get the funds you deserve.
Key Takeaways
- Eligibility: Self-employed during 2021, with COVID-related inability to work.
- Potential Benefit: Up to $32,220 in refundable tax credits.
- Action Required: Amend your 2021 tax return using Form 1040-X and Form 7202 by April 18, 2025.
- Documentation: Keep thorough records of the dates and reasons for your leave in case of an IRS audit.
Don’t miss out on this opportunity to claim what’s rightfully yours. Amend your 2021 tax return today and secure the financial relief you may have overlooked.
For more detailed guidance on how to amend your tax return or to explore other tax-saving opportunities, visit IRSProb.com.
Disclaimer: This article provides general information and should not be construed as tax advice. Please consult with a qualified tax professional to discuss your specific circumstances.
