If you see information about a “Self Employment Tax Credit” on social media, don’t believe it; the credit doesn’t exist.
The Internal Revenue service has issued a consumer alert warning that bad advice is misleading taxpayers into filing false claims.
The IRS says promoters and social media are marketing the so-called “Self Employment Tax Credit” as a means for self-employed people and gig workers to get large payments for the COVID-19 period. Like misleading marketing around the Employee Retention Credit, there is inaccurate information suggesting many people qualify for the tax credit and payments of up to $32,000 when they do not.
The credit referenced in social media isn’t called the “Self Employment Tax Credit,” it’s Credits for Sick Leave and Family Leave, a more technical and limited credit. Many people being led to believe they qualify for this credit simply do not. The IRS warns that it is closely reviewing claims coming under this provision, so those filing claims do so at their own risk.
Self-employed individuals may claim Credits for Sick and Family Leave only for limited COVID-19 related circumstances in 2020 and 2021. It is not available for 2023 tax returns. To qualify, self-employed workers must meet a variety of technical criteria in 2020 and 2021 that didn’t allow them to work, including caring for an individual subject to a quarantine or isolation order.
The IRS urges people to consult with a trusted tax professional before filing for a “Self Employment Tax Credit” or other questionable tax claims circulating on social media.
