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What is the SETC Tax Credit?
The SETC, which stands for “Self-Employed Tax Credit”, is a specialized tax credit created to give financial relief to self-employed workers who were adversely impacted by the COVID-19 pandemic. click here was brought in 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 eligible self-employed individuals can get the credit as a refund, even if they have no tax liability. The credit effectively reduces their tax burden on a dollar-for-dollar basis, possibly leading to a significant increase in their tax refund.
learn more is intended to give self-employed people financial support similar to the paid sick and family leave benefits typically offered to employees. By giving this credit, the government acknowledges the unique challenges faced by the self-employed sector during the pandemic and attempts to mitigate income disruptions and promote greater financial stability for these professionals.