The SETC Tax Credit

What is the SETC Tax Credit?

The SETC, short for "Self-Employed Tax Credit", is a specific tax credit created to give financial relief to self-employed people who were adversely impacted by the COVID-19 pandemic. This credit was implemented 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.

learn more  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 workers can receive the credit as a refund, even if they have no tax liability. The credit significantly reduces their tax burden on a dollar-for-dollar basis, potentially leading to a significant increase in their tax refund.

The SETC tax credit is intended to give self-employed people financial support similar to the paid sick and family leave benefits typically offered to employees. By providing this credit, the government acknowledges the unique challenges faced by the self-employed sector during the pandemic and aims to mitigate income disruptions and promote greater financial stability for these professionals.