The IRS has released a draft of the form that will be used by self-employed individuals to claim a credit for family and sick leave that was enacted as part of the Families First Coronavirus Relief Act (FFCRA). Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals[1] is to be used by taxpayers qualifying for this credit.

Part I of the form will be used to claim the basic sick leave credit, the equivalent of the credit available to employers who provide covered sick leave mandated by the FFCRA. The same six criteria apply as applied for employees (See our March 19, 2020 article Congress Enacts Small Employer Mandatory Paid Sick Time Rules and Related Refundable Payroll Tax Credit[2] for details of those requirements.)

The additional credit for up to of 8 weeks of family leave, generally related to children being unable to attend school or preschool, is computed in Part II.

Note that in both cases the self-employed person must consider amounts received from an employer under the same program when computing the self-employed person’s maximum credit.

The self-employed person must have been unable to perform services for the days in question in order to qualify for this credit—so it’s not enough just to fall into one of the six categories, but the taxpayer must also have been unable to perform services during that period. It would not be surprising on exam for the IRS to ask for the specific time period being claimed and examine records of the business, including income and billing records, to determine if, in fact, the self-employed person performed services during the days for which a credit is being claimed.

[1] Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, September 2, 2020, https://www.irs.gov/pub/irs-dft/f7202--dft.pdf (retrieved September 15, 2020)

[2] Ed Zollars, CPA, “Congress Enacts Small Employer Mandatory Paid Sick Time Rules and Related Refundable Payroll Tax Credit,” Current Federal Tax Developments website, March 19, 2020 (retrieved September 15, 2020)