The SETC Tax Credit

What is  setc tax credit ?

The SETC, which stands for "Self-Employed Tax Credit", is a specific tax credit intended to offer financial relief to self-employed individuals who were harmed 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 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 qualified self-employed people 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, potentially 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 offering this credit, the government recognizes the unique challenges faced by the self-employed sector during the pandemic and aims to mitigate income disruptions and promote greater financial stability for these professionals.