The SETC Tax Credit
What is the SETC Tax Credit?
The SETC, which stands for "Self-Employed Tax Credit", is a specialized tax credit intended to offer financial relief to self-employed individuals who were negatively affected by the COVID-19 pandemic. This credit was introduced as part of the Families First Coronavirus Response Act (FFCRA) to support sole proprietors, independent contractors, gig workers, and other self-employed professionals dealing with economic challenges due to the pandemic.
One of the key features of the SETC tax credit is that it is a refundable credit, not a loan. This means that entitled self-employed people can receive the credit as a refund, even if they have no tax liability. https://squareblogs.net/otteroctave6/the-setc-tax-credit-lf93 reduces their tax burden on a dollar-for-dollar basis, potentially leading to a significant increase in their tax refund.
The SETC tax credit aims to provide self-employed people financial support like the paid sick and family leave benefits typically offered to employees. By providing this credit, the government recognizes the unique challenges faced by the self-employed sector during the pandemic and attempts to mitigate income disruptions and promote greater financial stability for these professionals.