What Is the Self-Employment Tax Credit and Who Qualifies?

The self-employment tax credit is a refundable federal tax credit that reimburses sole proprietors, independent contractors, and partners for days they could not work in 2020 or 2021 because of COVID-19. It was created by the Families First Coronavirus Response Act and expanded by the American Rescue Plan Act of 2021, and it was never available for any tax year after 2021. If you are reading this in 2026, the first question is not whether you qualify. It is whether your window to file is still open. For most people, it isn’t.

Can You Still Claim It in 2026

A claim for refund must be filed within three years of the date you filed the original return, or within two years of when you paid the tax, whichever is later.¹ Because the credit only applies to 2020 and 2021, that puts almost every filer past the deadline.

2020 tax year: If you filed by the April 15, 2021 due date, your window closed April 15, 2024. If you filed on extension by October 15, 2021, it closed October 15, 2024.
2021 tax year: If you filed by April 18, 2022, your window closed April 18, 2025. If you filed on extension, it closed in October 2025.

No special extension exists for these leave credits.² The Federal Disaster Tax Relief Act of 2023 extended certain deadlines for wildfire relief payments but does not apply here. If your three-year window has closed, the IRS will reject the amended return no matter how well you qualify on the merits. Check your actual filing dates before paying anyone to prepare a claim.

Who Qualifies

You had to be self-employed during 2020 or 2021, meaning you carried on a trade or business as a sole proprietor, independent contractor, or partner and reported net earnings from self-employment.³ In practice, that means you filed a Schedule SE with a net profit. W-2 wages alone do not qualify, and the IRS has specifically flagged returns that treated employee income as the basis for this credit.⁴

Beyond being self-employed, you must have missed days of work between April 1, 2020 and September 30, 2021 for a qualifying COVID-19 reason.⁵ Qualifying reasons split into two groups, and which group applies changes both the daily rate and the number of days you can count.

Personal Health Reasons

Higher daily cap. You qualify if you were subject to a federal, state, or local quarantine or isolation order, were advised by a healthcare provider to self-quarantine, or were experiencing COVID-19 symptoms and seeking a diagnosis. Beginning April 1, 2021, time spent getting a COVID-19 vaccination or recovering from its side effects also counts.⁶

Caregiving and School Closures

Lower daily cap. You qualify if you missed work caring for someone under a quarantine or isolation order, caring for a child whose school or daycare was closed for COVID-19 reasons, or (from April 1, 2021 forward) accompanying a family member to a vaccination appointment or caring for someone recovering from side effects.⁶

How Much the Credit Is Worth

The starting number is your average daily self-employment income: net earnings from self-employment for the tax year, divided by 260 (the standard number of working days).⁷ You may use the prior year’s net earnings instead if that produces a higher figure, which often helps filers whose 2020 or 2021 income dropped sharply.

Sick Leave Credit

For personal health reasons, you can claim 100% of average daily self-employment income, capped at $511 per day, for up to 10 days. That is a maximum of $5,110 per covered period. For caregiving reasons under the sick leave category, the rate drops to 67% of average daily income, capped at $200 per day, again for up to 10 days, or $2,000 maximum. The American Rescue Plan reset the 10-day allowance for leave taken between April 1, 2021 and September 30, 2021, so someone who used the full 10 days earlier could claim another 10 in the second window.⁵

Family Leave Credit

Family leave uses the same 67% rate and $200 daily cap but allows far more days: up to 50 days for leave taken between April 1, 2020 and March 31, 2021, and up to 60 more days between April 1, 2021 and September 30, 2021.⁷ A self-employed parent who missed work throughout both windows caring for children home from school could claim up to 110 days of family leave, with a combined family-leave maximum of $22,000.

The credit is refundable, so it can produce a refund even in a year you owed no federal income tax.⁵

How to File If Your Window Is Still Open

The credit is calculated on Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. The 2021 version has four parts covering leave from January 1 through March 31, 2021 and April 1 through September 30, 2021 separately, and the total flows to Schedule 3 of Form 1040.⁸

Because the original filing seasons are long past, you claim it on an amended return using Form 1040-X, filed electronically through authorized software or on paper.⁹ The IRS estimates amended returns take 8 to 12 weeks to process, with some running to 16 weeks.¹⁰

If You Also Had W-2 Sick or Family Leave Wages

If you worked a W-2 job during 2020 or 2021 and your employer paid you qualified sick or family leave wages, your self-employed credit is reduced. The combined total of employer-paid leave wages and your self-employed credit cannot exceed the statutory maximum for the relevant period: $5,110 for personal sick leave at the higher rate, $2,000 for caregiving sick leave, or $12,000 for family leave during the ARP window.⁷ Check Box 14 of any W-2 from those years for reported leave wages.

If You Received PPP Loan Forgiveness

You cannot claim the self-employed leave credit on the same self-employment income used to justify Paycheck Protection Program loan forgiveness. The IRS prohibits claiming both benefits for the same earnings.¹¹ If your PPP loan was not forgiven, the restriction does not apply.

Documentation to Keep

The IRS requires self-employed claimants to keep records establishing eligibility, and given how aggressively this credit has been audited, thorough records aren’t optional.¹² Keep, at minimum:

Your Schedule SE showing net earnings, plus 1099s or invoices proving the underlying self-employment.
A written log of each day you could not perform services, with the specific COVID-19 reason.
Quarantine or isolation orders, provider advice to self-quarantine, or records of testing and vaccination appointments.
Notices from a child’s school or daycare confirming closures for COVID-19 precautions.
Any W-2 forms showing qualified sick or family leave wages in Box 14.

The IRS advises that self-employed documentation should mirror what employers must maintain for the parallel employer-side credits.⁷

Watch for Scam Promoters

The IRS has flagged the self-employed sick and family leave credit as one of the most abused claims in recent filing seasons, including it on its annual Dirty Dozen list of tax scams.⁴ Two patterns keep showing up: claiming the credit based on W-2 wages rather than actual self-employment income, and claiming it on 2022 or 2023 returns when it was only available for 2020 and 2021. If a preparer or online promoter promises a large refund through this credit and you were not genuinely self-employed or did not actually miss work for a qualifying reason during the eligible window, the claim is false. Filing one can bring penalties, interest, and potential criminal exposure.

1
Office of the Law Revision Counsel. 26 US Code 6511 – Limitations on Credit or Refund
2
Internal Revenue Service. Instructions for Form 1040-X (12/2025)
3
Office of the Law Revision Counsel. 26 USC 1402 – Definitions
4
Internal Revenue Service. Misleading Social Media Advice Leads to False Claims for Fuel Tax Credit, Sick and Family Leave Credit, Household Employment Taxes
5
Internal Revenue Service. Paid Sick and Family Leave Credit – 2020 vs 2021 Comparison Chart
6
Internal Revenue Service. Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 – General Information
7
Internal Revenue Service. Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 – Specific Provisions Related to Self-Employed Individuals
8
Internal Revenue Service. Form 7202 – Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals (2021)
9
Internal Revenue Service. About Form 1040-X, Amended U.S. Individual Income Tax Return
10
Internal Revenue Service. Topic No. 308, Amended Returns
11
Internal Revenue Service. Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 – Special Issues for Employers
12
IRS.gov. 2021 Instructions for Form 7202 – Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals