Self-employed people were included in the federal tax relief bill that was passed to help Americans impacted by the coronavirus pandemic.
Under the Family's First Response Act, there are several credits for 2020 tax returns, Lisa Greene-Lewis, CPA and tax expert at TurboTax tells TheStreet's Tracy Byrnes in this special video series in partnership with TurboTax.
One of them is the qualified sick leave tax credit and another one is the qualified paid family leave credit. The qualified sick leave credit helps self-employed workers if they are sick or a family member is sick. You can also utilize this credit if your child’s daycare is closed.
The qualified sick leave equivalent amount is equal to the number of days in the taxable year that you cannot perform services due to COVID-19 up to 10 days, multiplied by the lesser of $511 per day or 100% of the average daily self-employed income.
If you're taking care of a child, it's based on up to 10 days, up to lesser of $200, or a percentage of your average daily income. For the qualified family leave, that credit is for up to 50 days multiplies by the lesser of $200 per day or 67 percent of your daily average.
The tax credits are claimed on your 2020 tax returns. But some self-employed workers need some money right now. One option is to adjust their estimated tax payments and decrease them based on the tax credits they will receive, Greene-Lewis says. This is a way to have some cash on hand right now.
Intuit has created a Tax Credit Estimator to help people figure their tax payments. Taxpayers enter the amount of days they've missed and their estimated income, she says. The estimator also gives advice like how people can change their estimated tax payments to put more money in your pocket right now.
To get more information, resources, tools and figure out the qualified paid sick and family leave go to TurboTax new Self-Employed Coronavirus Relief Center on the TurboTax Blog.
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