The SETC Tax Credit

What is the SETC Tax Credit?

The SETC, short for "Self-Employed Tax Credit", is a specific tax credit designed 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 experiencing economic challenges due to the pandemic.

this guide has details  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 individuals can get the credit as a refund, even if they have no tax liability. The credit effectively reduces their tax burden on a dollar-for-dollar basis, possibly leading to a significant increase in their tax refund.

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