Did you or your staff need time off for coronavirus, quarantine, or remote school in 2020 or 2021?
The COVID-19 pandemic not only impacted the operating status of most businesses, but it also caused interruptions to the workforce for a variety of reasons. Many business owners and employees impacted by COVID were unable to work for certain periods. In many cases, businesses provided paid sick leave to these individuals. But for sole-proprietors, sick leave is not an option when you cannot be present for work. Your expenses remain the same, but your revenue is greatly reduced because you cannot serve children.
If you were able to provide qualified paid sick leave during the pandemic or are a sole-proprietor who took off due to COVID-19 related reasons, you could be eligible for the Families First Coronavirus Response Act (FFCRA).
The FFCRA is a refundable tax credit – meaning it’s a tax credit that comes back to you in the form of cash – for businesses that paid qualified sick leave to employees during the pandemic, or sole-proprietors. Businesses that paid staff experiencing any of the following between March 15, 2020 and September 30, 2021 may be eligible:
Coronavirus-19 (COVID) illness
Quarantining because of a potential or direct COVID exposure
Taking care of a family member with COVID
Taking care of your children because their child care provider or school was closed or limited to remote education
While the FFCRA program ended on September 30, 2021, you can apply for the credit for 2020 and 2021 retroactively. You can do so through a simple amendment to your 1040 tax return for those years. Sole proprietors will complete the form 7202: Credits for Sick leave and Family Leave for Certain Self-Employed Individuals. Businesses with employees will amend your Form 941 for those quarters that were impacted.
In a Texas child care business coaching program, providers accessing the FFCRA had an average estimated credit of $3,211! Are you wondering how do you figure out your credit amount as a sole proprietor? To calculate your daily rate of pay, take Line 31 of your Schedule C and divide by 260 (days). That figure is then how much you can claim for each qualified day of leave you had.
To learn more, read our detailed guide to the FFCRA Leave.
Note: If you are a child care provider in Texas, Virginia, Indiana, or Wisconsin you may be eligible for free business coaching from Civitas Strategies Early Start on the FFCRA or any child care business topic. Learn more here.
LaToshia DeVose is a Senior Consultant with Civitas Strategies Early Start. She has 11 years of experience working in various capacities on initiatives geared toward increasing child care program capacity, enhancing facilities, and strengthening organizational business operations. She is a firm believer that every business operator has the ability to manage an effective business and that every child deserves a quality education.
Photo by Karolina Grabowska
