Introduction
The Families First Coronavirus Response Act (FFCRA) has undoubtedly played a crucial role in providing relief to employees affected by the COVID-19 pandemic. But what about self-employed individuals? Are they eligible for the benefits offered by the FFCRA? And is this too good to be true? In this comprehensive guide, we will answer these questions and provide you with all the information you need to navigate the FFCRA as a self-employed individual.
A Brief History of the FFCRA
The Family First Coronavirus Response Act (FFCRA) was enacted in direct response to the COVID-19 crisis. Signed into effect on March 18, 2020, the FFCRA aimed to provide much-needed assistance and relief to workers across America who have been impacted by the virus.
The FFCRA mandated that certain employers must provide their employees with paid sick leave and expanded family and medical leave for specific reasons related to COVID-19. These reasons include situations where employees cannot work due to their own illness or quarantine, caring for someone who is ill or quarantined, or taking care of children whose schools or childcare providers are closed due to the pandemic.
Understanding FFCRA Benefits for Self-Employed Individuals
Initially, the FFCRA focused mainly on employees working under covered employers. However, recent expansions approved by Congress have made it possible for self-employed individuals to take advantage of specific provisions offered by the FFCRA, namely the Emergency Paid Sick Leave (EPSL) and the Expanded Family and Medical Leave (EFMLA).
If you meet the eligibility criteria, you have the opportunity to claim up to $32,220 back from the IRS in the form of tax credits. It's important to note that tax credits are a type of refund that can either reduce the amount of taxes you currently owe or be sent to you directly by the IRS.
FFCRA Eligibility Criteria for Self-Employed Individuals
To determine if you qualify for FFCRA benefits, you must meet specific criteria as a self-employed individual. This includes being classified as a sole proprietor, freelancer, gig worker, or partner in a partnership. Your business must meet the IRS definition of self-employment, and you should have experienced a COVID-19-related circumstance that qualifies for FFCRA leave.
To help you assess if you're considered self-employed, here's a definition straight from the IRS:
You carry on a trade or business as a sole proprietor or an independent contractor.
You are a member of a partnership that carries on a trade or business.
You are otherwise in business for yourself, including part-time business or gig work.
If you filed a Schedule SE (Form 1040) during 2020 or 2021, you may qualify for FFCRA benefits. Examples of workers who would have filed this form include hair stylists, gig workers, independent contractors, freelancers, e-commerce owners, food delivery drivers, and rideshare drivers. Unfortunately, if you didn't file a Schedule SE, you won't be able to claim these tax credits.
Next, you must have met the criteria to receive FFCRA credits and demonstrate that your business had lost income due to COVID-19-related reasons.
COVID-19-Related Reasons for Claiming the FFCRA
To be eligible for FFCRA benefits, you must have experienced specific COVID-19-related circumstances that affected your ability to work. Some of these eligible reasons include:
Quarantine or lockdown orders from federal, state, or local governments.
Caring for a child whose daycare or school has closed due to COVID-19.
Having symptoms of COVID-19 or seeking a medical diagnosis.
Experiencing side effects from the COVID-19 vaccine.
Caring for someone with COVID-19 symptoms.
Calculating Your Eligible Paid Leave
Once you establish your eligibility for FFCRA benefits, you can calculate your eligible paid leave based on your average daily self-employment income. This calculation may involve some math, but don't worry—we'll guide you through the process. Our partner Gig Worker Solutions has an amazing portal. Their platform designed to assist self-employed individuals like you, we'll provide the necessary tools to help with these calculations.
Documenting Your Eligibility and Claiming Benefits
To claim your FFCRA benefits successfully, it is essential to document your eligibility and keep accurate records. This includes maintaining records of COVID-19-related reasons for leave, government quarantine orders or advisories, and communication with healthcare providers. Proper documentation is crucial for a smooth application process and to protect yourself in case the IRS requires additional information.
You should also have records of your taxes, and The Gig Worker portal, will take care of that for you. The platform will pull your tax data directly from the IRS, ensuring accuracy and streamlining the entire process.
Application Deadline and Stipulations
Fortunately, there's no hidden catch to the FFCRA. It was specifically designed to help businesses, including self-employed individuals, overcome the economic impact caused by COVID-19. However, it is important to note the following stipulations:
The deadline to file for 2020 relief is April 15, 2024. For 2021 (or a mix of 2020 and 2021), applications must be submitted by April 15, 2025.
To receive a check or ACH deposit, you should have a $0 balance with the IRS. This means any outstanding or past-due taxes will be paid off first, and you'll receive the remaining amount, if any.
There are limits regarding the number of sick days and family and medical leave that can be claimed. The maximum is 20 sick days and 110 days for family and medical leave.
You can only claim one date for either category, avoiding "double-dipping."
Since FFCRA benefits are a refund of taxes you've already paid, you must have had positive tax earnings. In other words, you need to have made a profit for the year you're claiming.
For more details about the stipulations and requirements to qualify for the FFCRA, we have an extensive FAQ section available for you.
Why Would the IRS Refund My Taxes?
The decision to offer refunds is rooted in the federal government's interest in supporting businesses impacted by COVID restrictions. Recognizing the crucial role small businesses play in local and national economies, the government is willing to be flexible with what is typically owed. However, this is a limited-time opportunity and won't last forever. To ensure you get your FFCRA filed as soon as possible, we recommend utilizing the Gig Worker portal,
The Bottom Line
The FFCRA offers a valuable opportunity for self-employed individuals to access essential benefits designed to help them recover from the challenges brought about by the COVID-19 pandemic. While it may seem like "free" money, meeting specific criteria and following the proper filing process is crucial to obtaining the benefits you're entitled to. With Gig Workers comprehensive platform created specifically for self-employed individuals, we are here to support you, simplify the filing process, and help you secure your FFCRA refund quickly and efficiently. Take advantage of our 3-minute pre-qualification quiz here.
