The SETC Tax Credit

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The SETC, meaning "Self-Employed Tax Credit", is a specialized tax credit intended to provide financial relief to self-employed workers who were negatively affected by the COVID-19 pandemic. This 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 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 entitled 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.

The SETC tax credit aims to provide self-employed people financial support similar to the paid sick and family leave benefits typically offered to employees. By providing  this guide has details , the government recognizes 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.