It’s been a few years since the world felt like it was ending, but the financial aftershocks of the pandemic are still rattling around. If you were working for yourself back then, you probably remember the chaos. Contracts vanished. Clients stopped paying. You might have even caught the virus yourself and spent two weeks staring at the ceiling instead of invoicing. Most people know about the PPP loans that bailed out big companies, but the self employed tax credit 2021—technically known as the FFCRA credits—is the one that actually mattered for the solo players. Honestly, it’s wild how many people still don't realize this money is sitting on the table.
You didn't have to have a massive office or a fleet of trucks. If you were a graphic designer, a plumber, or a consultant filing a Schedule C, the government basically acknowledged that you didn't have "sick days" like corporate employees did.
The IRS isn't exactly known for shouting about free money from the rooftops. They call it the Families First Coronavirus Response Act. It's a mouthful. Basically, it’s a way to get reimbursed for the time you couldn't work because of COVID-19. We're talking about periods between April 1, 2020, and September 30, 2021. Even though 2021 feels like ancient history, the clock hasn't run out yet because of how amended returns work.
How the Self Employed Tax Credit 2021 Actually Works
Let’s get into the weeds. This isn't a loan. It's a refundable credit. That’s a massive distinction because a deduction just lowers your taxable income, but a refundable credit is basically a check from the Treasury. If you owed $500 in taxes but qualified for a $3,000 credit, the government owes you $2,500.
The math is where it gets hairy. You have to look at your "average daily self-employment income." To find this, you take your net earnings for the year and divide by 260. If you made $50,000 in net profit on your 2021 tax return, your daily rate is about $192.
There are two main buckets for the self employed tax credit 2021. The first is for your own health. If you were sick, or had to quarantine because a doctor told you to, or you were waiting for a test result, you could claim 100% of that daily rate, up to $511 per day. You could do this for up to 10 days.
The second bucket is for family care. This is where the numbers get bigger but the daily rate gets smaller. If you had to stay home because your kid’s school was closed or their daycare was shut down—which, let’s be real, was almost everyone in 2021—you could claim 67% of your daily rate. The cap here is $200 per day. For the 2021 portion of the credit, you could claim up to 60 days of this.
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Think about that. Sixty days at $200 a day. That’s $12,000.
The Eligibility Maze
You can't just "feel" like you deserve it. You need a paper trail. The IRS requires you to have had self-employment income in 2020 or 2021. You also had to be unable to work—and "work" includes telework. If you were a writer and could still type while your kid watched Frozen for the 50th time in the next room, the IRS might argue you weren't technically "unable" to work. But if you were a wedding photographer and the venue was closed by a government mandate, you’re in a much stronger position.
Many people get confused about the dates. There was a first "half" of the credit for 2020 and a refreshed "half" for 2021. The American Rescue Plan Act of 2021 actually reset the clock on April 1, 2021. This meant even if you used up your 10 days of sick leave in 2020, you got a fresh 10 days starting in April 2021.
Why Most People Mess Up the Claim
The biggest hurdle isn't the math. It's the "double-dipping" rule. If you received a PPP (Paycheck Protection Program) loan, you have to be careful. You can't use the same payroll dollars for both programs. If you told the SBA that you used your PPP money to pay yourself during the month of May, you can't also claim the self employed tax credit 2021 for those same days in May. It’s one or the other.
The IRS isn't playing around with this. They’ve been clear in their instructions for Form 7202. That’s the specific form you use to calculate these credits. If you try to claim 70 days of leave and you also got two rounds of PPP, your return is going to look like a Christmas tree to an IRS auditor.
Another weird nuance? Your "net earnings" matter. If your business lost money in 2021—maybe because everything was shut down—your credit might be $0 because your average daily income was $0. However, the IRS allowed a "prior year election." This was a lifesaver. It allowed you to use your 2019 net earnings to calculate the credit for 2020 or 2021. Since 2019 was likely a more profitable year for most freelancers, this choice can drastically increase the check you get back.
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Tracking Down Your Records (Before it's Too Late)
You need documentation. It doesn't have to be a leather-bound journal, but you need more than a "trust me" vibe.
For sick leave:
- A copy of the positive test result.
- The name of the doctor who told you to quarantine.
- The date the symptoms started.
For family care:
- The name of the child.
- The name of the school or daycare.
- The official notice that they were closed (an email or a screenshot of a news report works).
If you’re claiming the self employed tax credit 2021 now, you're doing it through an amended return, specifically Form 1040-X. Generally, you have three years from the date you filed your original return to claim a refund. For most people, the window for the 2021 tax year starts closing in April 2025. You're cutting it close, but you're not out of time yet.
Common Myths About the FFCRA for Freelancers
A lot of people think this was only for "essential workers." Nope. It was for anyone with a Schedule C. DoorDash drivers, independent hairstylists, consultants, software engineers—if you paid self-employment tax, you’re in the running.
Another myth is that you had to actually catch COVID. While that’s one way to qualify, "caring for an individual" who was quarantined also counts. If your spouse was sick and you had to be the primary caregiver, preventing you from doing your freelance work, that counts. The definition of "individual" is actually quite broad; it's not just immediate family, though you generally need a "personal relationship" with them.
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Real World Example: The Consultant's Refund
Let’s look at a hypothetical freelancer named Sarah. Sarah is a marketing consultant who netted $78,000 in 2019. In 2021, her kids were home from school for a total of 40 days due to various exposures and school closures. She also caught a mild case of COVID herself and couldn't work for 5 days.
Using her 2019 income (the prior year election), Sarah's daily rate is $300 ($78,000 / 260).
For her own illness: 5 days x $300 = $1,500.
For her kids being home: 40 days x $200 (the $200 cap applies since 67% of $300 is $201) = $8,000.
Sarah is looking at a $9,500 tax credit. That isn't pennies. That’s a down payment on a car or a massive relief for a rainy day fund. But if Sarah doesn't file the 1040-X and the Form 7202, that money stays with the government.
Actionable Steps to Take Right Now
If you think you missed out on the self employed tax credit 2021, don't just sit there. The process is manual and a bit tedious, but the payoff is high.
- Pull your 2019, 2020, and 2021 tax returns. You need the Schedule C specifically. Look at Line 31 to find your net profit.
- Check your calendar. Look back at your emails and texts from 2021. When was the school closed? When did you have that fever? Mark the specific dates.
- Download Form 7202 and its instructions. Read the "Prior Year Net Earnings" section carefully. This is the "secret sauce" for most people.
- Account for PPP. If you got a PPP loan, find the forgiveness application. See which dates you "paid" yourself. Cross those dates off your list for the tax credit.
- Consult a pro. Amended returns for COVID credits are high-scrutiny items. If you use a CPA, ask them specifically about "FFCRA credits for self-employed individuals." If they look at you like you have three heads, find a tax pro who specializes in pandemic relief.
- File the 1040-X. You have to mail this in. The IRS is still catching up on paper returns, so expect to wait 16 to 20 weeks—or longer—for the check to arrive in your mailbox.
The reality is that these credits were designed to level the playing field. W-2 employees got paid sick leave through their companies, and the companies got reimbursed by the government. The self employed tax credit 2021 is simply the version of that for the rest of us who don't have a HR department to handle the paperwork. It’s your money. Go get it.