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Can I claim Self Employed Family Leave Credit if I also took a PPP Loan?

Forum|Forum|5 years ago
February 6, 2021
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I had to take time off from my business (I'm self-employed) to look after my kids last year due to lack of available childcare.

At the time I took a PPP loan.

Can I now claim the credit on top of the (forgiven) loan?

Not A Product Question

Best answer by cowdogman

JeffreyR77 is not correct. There is no requirement for a self-employed person to pay himself wages. The credit is based on self-employed income. JeffreyR77's paraphrasing Form 7202 is incorrect. Look at the instructions to the form, partly quoted below:

Who May File Form 7202?
Eligible self-employed individuals are entitled to claim
qualified sick and family leave equivalent credits. To be an
eligible self-employed person, both the following must be
true.
1. You regularly carried on a trade or business within the
meaning of section 1402.
2. You would have been:
a. Eligible to receive qualified sick leave wages under the
Emergency Paid Sick Leave Act if you had been an
employee of an employer (other than yourself), and/or
b. Eligible to receive qualified family leave wages under
the Emergency Family and Medical Leave Expansion Act if
you had been an employee of an employer (other than
yourself).

Note the word "if". Also look at the instructions for Line 7 of Form 7202: "Line 7: Enter your net earnings from self-employment. In most cases, this is the amount from line 6 of Schedule SE (Form 1040)."

J

JeffreyR77

It depends. You must file form 7202 and:

Conduct a trade or business that qualifies as self-employment income, and
Be eligible to receive qualified sick or family leave wages under the Emergency Paid Sick Leave Act or Emergency Family and Medical Leave Expansion Act as if the taxpayer was an employee.

If you are self-employed and are on payroll, you would be eligible. Self-employed sole proprietors and partners do not draw wages and would not be eligible for Family Medical Leave.

Families First Coronavirus Response Act (FFCRA) Information

P

peter1Author

@JeffreyR77 Thank you so much. I totally misread it. I am a sole proprietor and do not take wages.

Interestingly Turbotax didn't seem to indicate this was a problem, but I'm glad I asked and didn't claim it wrongly!

cowdogmanAnswer

JeffreyR77 is not correct. There is no requirement for a self-employed person to pay himself wages. The credit is based on self-employed income. JeffreyR77's paraphrasing Form 7202 is incorrect. Look at the instructions to the form, partly quoted below:

Who May File Form 7202?
Eligible self-employed individuals are entitled to claim
qualified sick and family leave equivalent credits. To be an
eligible self-employed person, both the following must be
true.
1. You regularly carried on a trade or business within the
meaning of section 1402.
2. You would have been:
a. Eligible to receive qualified sick leave wages under the
Emergency Paid Sick Leave Act if you had been an
employee of an employer (other than yourself), and/or
b. Eligible to receive qualified family leave wages under
the Emergency Family and Medical Leave Expansion Act if
you had been an employee of an employer (other than
yourself).

Note the word "if". Also look at the instructions for Line 7 of Form 7202: "Line 7: Enter your net earnings from self-employment. In most cases, this is the amount from line 6 of Schedule SE (Form 1040)."