The SETC Tax Credit

What is the SETC Tax Credit?

The SETC, meaning "Self-Employed Tax Credit", is a unique tax credit intended to give financial relief to self-employed people who were negatively affected 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.

One of the key features of the SETC tax credit is that it is a refundable credit, not a loan. This means that eligible self-employed individuals 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, possibly leading to a significant increase in their tax refund.

click here  seeks to offer self-employed workers financial support similar to the paid sick and family leave benefits typically offered to employees. By offering this credit, the government recognizes the unique challenges faced by the self-employed sector during the pandemic and seeks to mitigate income disruptions and support greater financial stability for these professionals.