Is the FFCRA Too Good To Be True? A Guide for Self-Employed Individuals

September 28, 2023

The Families First Coronavirus Response Act (FFCRA) has been instrumental in providing relief to employees impacted by the COVID-19 pandemic. But what about self-employed individuals? Are they eligible for the benefits offered by the FFCRA? And this can’t just be “free” money from the IRS, right? What’s the catch?

Here’s what you need to know.

A Brief History of the FFCRA

The Family First Coronavirus Response Act (FFCRA) is a crucial law that was enacted in direct response to the COVID-19 crisis. It was signed into effect on March 18, 2020, with the goal of offering much-needed assistance and relief to workers across America who have been affected by the virus.

The FFCRA mandated that certain employers must provide their employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19. This includes 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, due to recent expansions approved by Congress, self-employed individuals can now take advantage of specific provisions offered by the FFCRA, specifically the Emergency Paid Sick Leave (EPSL) and the Expanded Family and Medical Leave (EFMLA).

If you qualify, you can get up to $32,220 back from the IRS in the form of tax credits!

What’s a Tax Credit?

Tax credits are a type of refund that will either reduce the amount of taxes you currently owe or, if you have a $0 balance with the IRS, will be sent to you via either ACH or as a paper check, depending on your eligibility criteria.

Speaking of…

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. It is crucial to ensure that your business meets the IRS definition of self-employment and that you have experienced a COVID-19-related circumstance that qualifies for FFCRA leave.

Not sure 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 a part-time business or a gig worker).

Still confused? We understand; it’s a lot! The best way to determine if you’re eligible is: Did you file a Schedule SE (Form 1040) during 2020 or 2021? A few types of workers that would’ve filed this include, but are not limited to:

  • Hair stylists
  • Gig workers
  • Independent contractors
  • Freelancers
  • E-commerce owners (Etsy, eBay, Shopify, etc.)
  • Food delivery drivers
  • Rideshare drivers

If you did file a Schedule SE, you may qualify for FFCRA benefits. If you didn’t, unfortunately, you won’t be able to claim these tax credits.

Next, you’ll need to have met the criteria to receive FFCRA credits and show your business had lost income because of COVID-19-related reasons.

COVID-19-Related Reasons for Claiming the FFCRA

A few of these eligible reasons to have missed work include, but are not limited to:

  1. Quarantine/lockdown orders from federal, state, or local governments
  2. Caring for a child whose daycare or school has closed due to COVID-19
  3. Having symptoms of COVID-19 or seeking a medical diagnosis
  4. Experiencing side effects from the COVID-19 vaccine
  5. 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. Coming up with this requires a little bit of math but don’t worry; we’ll help you calculate this in the Adesso360 portal.

Documenting Your Eligibility and Claiming Benefits

To claim your FFCRA benefits, 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. Documentation is crucial for a smooth application process and to protect yourself in case the IRS wants more details.

You should also have records of your taxes, but we’ll take care of that for you in Adesso360. Our portal will pull your tax data directly from the IRS to ensure we’ve got everything right.

Okay, This All Sounds Great. What’s the Catch?

Luckily, there’s no “gotcha!” of the FFCRA since it was designed to help businesses (self-employed folks like you are included!) weather the economic impact caused by COVID-19. However, there are some stipulations you need to know:

  1. The deadline to file is approaching! Applications for 2020 relief are due by April 15, 2024. Applications for 2021 (or a mix of 2020 and 2021) are due by April 15, 2025. While that sounds like a long time, it’ll be here faster than you think! Get your FFCRA refund ASAP via the Adesso360 portal. Our team of CPAs and tax experts designed the portal to walk you through the entire process and ensure you get the maximum refund possible.
  2. You’ll need a $0 balance with the IRS to get a check or ACH deposit. That means any outstanding or past-due taxes will be paid off first, and you’ll receive whatever is left over (if anything).
  3. There are limits - You can claim a maximum of 20 sick days and 110 days for family and medical leave.
  4. You can only claim one date for either category (AKA no double-dipping).
  5. Since this is a refund of taxes you’ve already paid, you’ll need to have had positive tax earnings to qualify, meaning you’ll need to have made a profit for the year you’re claiming.

We have a more extensive FAQ here that dives into the stipulations you need to know to qualify for the FFCRA.

Why Would the IRS Just Refund My Taxes?

The decision to offer refunds can be complicated. Essentially, the federal government is vested in keeping businesses impacted by COVID restrictions afloat. They recognize small businesses, including yours, play a crucial role in local and national economies. Consequently, they are willing to be flexible with what you’d typically owe them. However, this is a limited-time opportunity and won’t be around forever, so it’s important you get your FFCRA filed ASAP!

The Bottom Line

The FFCRA offers a valuable opportunity for self-employed individuals to access essential benefits tailored to help them recover from the challenges brought about by the COVID-19 pandemic. While it might seem like “free” money from the IRS, there are specific criteria you’ll need to meet to get the benefits you’re entitled to. It’s why we’ve designed Adesso360 to help self-employed folks like you understand the filing process and get your FFCRA refund as quickly as possible. Click here to calculate your estimate using our 3-minute prequalification quiz.

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