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Paid sick and family leave tax credits

How it works
Although independent contractors are not usually included in paid sick leave benefits (though some states may have laws that include them), the FFCRA entitles eligible self-employed individuals to a paid sick or family leave tax credit.

The paid sick leave credit is available to an IC if they are unable to work or telework while under quarantine or are experiencing symptoms of coronavirus and seeking medical attention. They may receive a credit of up to $511 per day (up to $5,110 for 10 days) or 100% of their average daily income for up to 10 days—whichever is less.

A paid family leave credit is available if the leave is taken to care for a sick individual or child at home due to a school closure. The credit amount is either $200 per day or 67% of their average daily income for up to 50 days.

Note: Under this act, daily average self-employment income is calculated as self-employment net earnings for the taxable year divided by 260.

Things to consider
If an IC meets the criteria, they can claim the credit on their returns for the 2020 tax year—this tax credit comes directly from the IRS, meaning it is independent of any connection to a specific contracting company. However, keep in mind that it also means ICs may take leave for up to 50 days for reasons related to coronavirus.

Additional resources
IRS paid sick leave FAQs for the self-employed