Families First Coronavirus Response Act Provides Income Tax Family Leave Credit for the Self-Employed

March 26, 2020

Graves Dougherty Hearon & Moody

The Families First Coronavirus Response Act (the “Act”) provides to the self-employed a refundable income tax credit – the “Self-Employed Family Leave Credit” – including against the taxes on self-employment income and net investment income, for family leave.

1. Self-Employed Family Leave Credit: The credit is similar to the self-employed sick leave credit. Therefore, a self-employed person is treated as both “employer” and “employee” and is eligible for the credit to the extent that an employer would earn the payroll family leave credit if the self-employed person were an employee.
2. Self-Employed Family Leave Credit Amount: A self-employed person can receive an income tax credit with a maximum value of $10,000 as per the payroll family leave credit.
3. Decreases to Credit: However, those amounts are decreased to the extent that the self-employed person has insufficient self-employment income determined under a formula or to the extent that the self-employed person has received paid family leave from an employer under the Act.
4. Self-Employed Sick Leave Credit Period: The credit applies to the following period:
   (a) Beginning on a date determined by IRS that is no later than April 2, 2020, and
   (b) Ending on December 31, 2020.

IRS Information Site: Ongoing information on the IRS and tax legislation response to COVID- 19 can be found here.

Frank L. Leffingwell is a tax attorney in the firm’s Tax Planning & Controversy, Estate Planning, Probate & Trusts, and Real Estate sections.