The SETC Tax Credit

What is the SETC Tax Credit?

The SETC, meaning "Self-Employed Tax Credit", is a specific tax credit intended to give financial relief to self-employed people who were adversely impacted by the COVID-19 pandemic.  setc tax 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 facing 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 entitled self-employed people 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, potentially leading to a significant increase in their tax refund.

The SETC tax credit seeks to offer self-employed individuals 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 attempts to mitigate income disruptions and support greater financial stability for these professionals.