Are you self-employed or an LLC member and tensed over your Form 1040 that you forgot to fill? Take a deep breath, and relax. We have a piece of good news for you. With new tax breaks that you might not know, you can take advantage of them and explore your tax savings.
The Coronavirus Aid, Relief, & Economic Security Act (CARES Act) empowers you to defer 2020’s liability of yours for Social Security tax (12.4%) of the SE tax for the deferment period. The interval of 3/27/20 to 12/31/20 is set as the deferral period. You can pay the amount in two installments – Half by 12/31/21 and the remaining by 12/31/22. Ergo, if you are running out of cash, you can go this astute strategy and relax your mind. The Families First Coronavirus Response Act (FFCRA) bestows you with two federal taxes.
If you took sick leave between 4/1/20 & 12/31/20, you are entitled to get the leave credit for the period you took the leave. You can calculate your leave credits by adding 100% of the daily sick-leave amount with 67% of leaves you took to cater to an ill person or your son or daughter who is still under 18.
Maintaining the documents that will prove your eligibility and help you get your credits hassle-free is very important. The IRS website mentions that you need to document any government organization or healthcare provider who advised you for self-quarantine for sick leaves availed by you.
Coming to the family leave credit that you will get for the leaves you took for your family members, you can get 50 days of leaves. This credit is equal to the number of leaves you took multiplied by $200 or an average of your daily self-employment income, whichever is lesser. So, $10,000 is the maximum leave credit you will in this case.
COVID-19 pandemic that hobbled our lives through lockdowns, and economic fallout, these novel norms can give us some respite from the strain caused by the pandemic.