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 offer financial relief to self-employed workers who were negatively affected 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 experiencing 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 workers can get 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.

how to apply for the setc tax credit  is intended to give self-employed workers financial support comparable 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 seeks to mitigate income disruptions and support greater financial stability for these professionals.