The SETC Tax Credit

What is the SETC Tax Credit?

The SETC, meaning "Self-Employed Tax Credit", is a unique tax credit created to provide financial relief to self-employed individuals who were adversely impacted by the COVID-19 pandemic. This credit was brought in as part of the Families First Coronavirus Response Act (FFCRA) to support sole proprietors, independent contractors, gig workers, and other self-employed professionals facing economic challenges due to the pandemic.

https://www.openlearning.com/u/ludvigsenriggs-sgd1zw/blog/TheSetcTaxCredit012345678910111213141516171819202122232425 of the key features of the SETC tax credit is that it is a refundable credit, not a loan. This means that qualified self-employed workers can receive the credit as a refund, even if they have no tax liability. The credit essentially reduces their tax burden on a dollar-for-dollar basis, possibly leading to a significant increase in their tax refund.

The SETC tax credit seeks to offer self-employed people financial support comparable to the paid sick and family leave benefits typically offered to employees. By offering this credit, the government understands the unique challenges faced by the self-employed sector during the pandemic and seeks to mitigate income disruptions and ensure greater financial stability for these professionals.