Form 7202 - Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals
Note: This form is for individuals with self-employment income who are unable to work for reasons related to COVID-19.
Before starting Form 7202, complete the forms that include net earnings from self-employment:
- Schedule C
- Schedule F
- Schedule K-1 (Form 1065), Box 14A;
To complete Form 7202 in Software, from the Main Menu of the tax return select:
- Federal Section
- Deductions
- Credits Menu
- Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals
- If the return's filing status is MFJ, indicate which spouse the form is for.
- The self-employment earnings pulled from Schedule E, if any, will show ($0.00 in the example below). If an adjustment is needed, enter it in the adjustment field.
- Were you unable to work due to COVID-19? - Answer Yes.
- Under Tell us about any care you received or provided, select each check box that applies and enter the required information:
- After filling out the required information, choose Continue to save the form.
How the 7202 credit is calculated?
As provided under the Families First Coronavirus Response Act (FFCRA) enacted on March 18, 2020, the costs of providing leave to workers unable to work or telework due to circumstances related to the coronavirus can be offset with refundable tax credits against employment tax. The FFCRA also extended equivalent refundable credits to self-employed individuals, and Form 7202 is used by self-employed taxpayers to figure the amount to claim for qualified sick and family leave equivalent credits.
The credits can be claimed if the taxpayer couldn't work or had to take care of family members due to the coronavirus, and they are calculated the same way qualified sick leave wages are calculated under the Emergency Paid Sick Leave Act, or qualified family leave wages are calculated under the Emergency Family and Medical Leave Expansion Act, the two separate provisions of the FFCRA.
Calculation parameters:
- Ten days maximum sick leave. If the taxpayer missed days due to both their own health needs and also due to taking care of their family, the days missed due to their own health needs are calculated first.
- The missed days that count toward the credit must be between April 1 and December 31, 2020.
- Per day earnings from self-employment = total self-employment earnings / 260 days.
- Maximum $511 paid sick leave credit per day, and $5,110 in the aggregate.
- Family leave credit = 2/3 of the paid sick leave credit.
- Maximum $200 family leave credit per day and $2,000 in the aggregate.
- Maximum 50 days family leave credit allowed, up to $200 per day and $10,000 in the aggregate.
- Each credit is reduced by any qualified sick leave wages or qualified family leave wages received from an employer (indicated either on Form W-2, Box 14 or in a separate statement).
The form consists of two parts, and the sum of the credits calculated in each part is reported on Schedule 3 (Form 1040) line 12b.
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