If you’re self-employed, you are no stranger to the burden of self-employment taxes. And as the COVID-19 crisis continues, you may find it increasingly difficult to pay these taxes.

But there is hope! The CARES act includes several provisions for self-employed individuals to receive relief at this time, including tax payment deferrals, sick leave and family leave benefits. As you read the information below, you may find that you’re entitled to more benefits than you initially realized!

Am I allowed to defer some tax payments, too?

Yes. You can defer 50% of your social security tax due for the year 2020. The other 50% is due as follows:

  • 25% no later than December 31, 2021, and
  • 25% no later than December 31, 2022.

Note that although these payments are extended, this deferral may affect the amount owed for your quarterly estimated tax payments this year. If you have engaged our firm to keep your business’ books and prepare quarterly financial statements we will recalculate your estimated payment as part of this service. If you have not yet used us for your bookkeeping needs, we are providing an additional service in which we will recalculate your 1st and 2nd quarter estimates for this year to take into account the deferral. Contact us if you’d like to benefit from this assistance.

Click here for more information from the IRS on tax deferrals.

What Are My Sick Leave Benefits?

As a self-employed individual, the maximum number of COVID-19 creditable sick days you can take is 10 days per calendar year.

You qualify for paid COVID-19 related sick leave if…

  1. You are subject to a federal, state, or local quarantine or isolation order related to COVID-19
  2. A health care provider advised you to self-quarantine due to concerns related to COVID-19
  3. You are experiencing symptoms of COVID-19 and are seeking a medical diagnosis
  4. You are caring for an individual who is subject to a quarantine or isolation order or an advisory from a medical professional to self-quarantine
  5. You are caring for your child due to closure of school or place of care, or the childcare provider of your child is unavailable due to COVID-19 precautions
  6. You are experiencing any other substantially similar condition specified by the Department of Health and Human Services in consultation with the Department of the Treasury and the Department of Labor

The amount of refundable tax credit your receive varies depending on the reason of your sick leave. For example, if you were unable to work under reasons (1), (2), or (3) above, your refundable tax credit is equal to the number of days you were unable to work, multiplied by the lesser of

  • $511, or
  • 100 percent of your average daily self-employment income for the tax year.

But if you were unable to work under reasons (4), (5), or (6) above, your refundable tax credit is equal to the number of days you were unable to work, multiplied by the lesser of

  • $200, or
  • 67 percent of your average daily self-employment income for the tax year.

What If I Need To Take A Family Leave?

You are allowed to take family leave up to 50 days per calendar year.

You should qualify if you are unable to work or telework due to a need for leave to care for a child under age 18 because the school or place of care is closed, or the childcare provider is unavailable due to a public health emergency related to COVID-19.

If you qualify, your refundable tax credit is equal to the number of days you were unable to work, multiplied by the lesser of

  • $200, or
  • 67% of your average daily self-employment income for the tax year.

Click here for more information on paid sick and family leave for self-employed individuals.

If you are unemployed, be sure to familiarize yourself with other aspects of the CARES Act, as explained here.

But remember, you’re not in this alone! We are always ready and available to help taxpayers like you. Although our physical office is closed, contact us to see if you can take advantage of these benefits!