Don’t Forget Your SE FFCRA Credit
The Family First Coronavirus Response Act (FFCRA) was passed in early 2020 right before the CARES Act. FFCRA requires most employers to provide paid sick leave for employees that are affected by COVID-19. We have posted on this before.
However, another feature of the Bill allows self-employed individuals to also receive a credit if they are directly affected by COVID-19. In order to receive the credit, you must show that you really are not able to do work due to COVID.
For example, if you are diagnosed with COVID and must self-quarantine, but are able to work in the shop or do work in the house, then you will not qualify for the credit.
The maximum sick-leave credit is $511 per day for up to 10 days (a maximum $5,110 credit). The credit is calculated by taking your self-employment earnings and dividing by 260. Here is an example:
Jim reports total SE earnings from farming in 2021 of $165,000 which is an average of $635 per day. He was out of commission for only 6 days, therefore, his FFCRA credit is $3,066. If he had been out of commission for at least 10 days, then the maximum credit of $5,110 would be allowed.
You will report this credit on your Form 1040.
This credit only applies for the period January 1, 2021 to September 30, 2021.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Do you have the option to calculate the credit based on 2019 net SE income instead of 2021 net SE income?