As provided under the Families First Coronavirus Response Act (FFCRA) enacted on March 18, 2020, the costs of providing leave to workers unable to work or telework due to circumstances related to the coronavirus can be offset with refundable tax credits against employment tax. The FFCRA also extended equivalent refundable credits to self-employed individuals, and Form 7202 is used by self-employed taxpayers to figure the amount to claim for qualified sick and family leave equivalent credits.
The credits can be claimed if the taxpayer couldn't work or had to take care of family members due to the coronavirus, and they are calculated the same way qualified sick leave wages are calculated under the Emergency Paid Sick Leave Act, or qualified family leave wages are calculated under the Emergency Family and Medical Leave Expansion Act, the two separate provisions of the FFCRA.
Before working on Form 7202, complete or enter the forms that include net earnings from self-employment, i.e.,
- Schedule C
- Schedule F
- Schedule K-1 (Form 1065), Box 14A
- Ten days maximum sick leave. If the taxpayer missed days due to both their own health needs and also due to taking care of their family, the days missed due to their own health needs are calculated first.
- The missed days that count toward the credit must be between April 1 and December 31, 2020.
- Per day earnings from self-employment = total self-employment earnings / 260 days.
- Maximum $511 paid sick leave credit per day, and $5,110 in the aggregate.
- Family leave credit = 2/3 of the paid sick leave credit.
- Maximum $200 family leave credit per day and $2,000 in the aggregate.
- Maximum 50 days family leave credit allowed, up to $200 per day and $10,000 in the aggregate.
- Each credit is reduced by any qualified sick leave wages or qualified family leave wages received from an employer (indicated either on Form W-2, Box 14 or in a separate statement).
To access Form 7202, from the Main Menu of TaxSlayer Pro select:
- Payments, Estimates & EIC
- Self-Employed Sick/Family Leave Credit
The form consists of two parts, and the sum of the credits calculated in each part is reported on Schedule 3 (Form 1040) line 12b. Complete each menu line as needed:
Part I - Credit for Sick Leave for Certain Self-Employed Individuals
- Days you required coronavirus-related care - Enter the number of days the taxpayer was unable to perform their self-employed work for personal coronavirus-related reasons during the period April 1 to December 31, 2020, i.e., they were subject to a governmental quarantine order, they were advised by their physician to self-quarantine, or they were experiencing coronavirus symptoms and were seeking medical care.
- Days you provided coronavirus-related care to another - Enter the number of days the taxpayer was unable to perform their self-employed work for family coronavirus-related reasons during the period April 1 to December 31, 2020, i.e., caring for someone subject to a governmental quarantine order, caring for someone who was advised by their physician to self-quarantine, or caring for a child due to their school or child care facility being closed for coronavirus-related reasons.
- Employer paid sick leave subject to $511 - If any amounts were paid they will be notated "sick leave wages subject to the $511 per day limit" on Form W-2, Box 14 or in a separate statement from the employer.
- Employer paid sick leave subject to $200 - If any amounts were paid they will be notated "sick leave wages subject to the $200 per day limit" on Form W-2, Box 14 or in a separate statement from the employer.
Part II - Credit for Family Leave for Certain Self-Employed Individuals
- Days you provided coronavirus-related care to son/daughter under age 18 - Enter the number of days the taxpayer was unable to perform their self-employed work due to their son's or daughter's school being closed or child care provider being unavailable due to coronavirus-related reasons during the period April 1 to December 31, 2020. If there is a question about whether a particular individual fits the definition of son or daughter, see here for more information.
- Employer paid family leave wages - If any amounts were paid they will be notated "emergency family leave wages" on Form W-2, Box 14 or in a separate statement from the employer.
- Net earnings from self-employment - The amount on this line is the sum of the self-employment earnings reported in the return. If it needs adjusting, select the line and enter the +/- adjustment. Note: Per Section 287 of the Consolidated Appropriations Act, 2021, for tax year 2020 the taxpayer may elect to use the prior taxable year self-employment earnings instead of the current taxable year's self-employment earnings. If the taxpayer makes that election, enter an adjustment on this line.
IRS Notice 2020-54, Guidance on Reporting Qualified Sick Leave Wages and Qualified Family Leave Wages Paid Pursuant to the FFCRA