On July 15, 2024, the IRS issued an alert regarding this non-existent “Self-Employment Tax Credit” circulating and being promoted on social media. This misleading information has led taxpayers to file false claims. The “Self-Employment Tax Credit” is being promoted on social media as a way for self-employed individuals and gig workers to get substantial payments during the COVID-19 pandemic. There is incorrect information going around that suggests many people can get the tax credit and receive up to $32,000 in payments, when in fact they are not eligible.

The “Self-Employment Tax Credit” is not the actual name for the underlying credit being mentioned. Instead, it is a more narrow and specialized credit called the Sick Leave and Family Leave Credits. This credit is intended for self-employed workers who faced limited COVID-19 related circumstances in 2020 and 2021 and could not work or had to care for an individual in isolation or quarantine due to COVID-19.

There are a variety of requirements to qualify for this credit, and many people simply do not meet these criteria. The IRS provided a detailed set of Frequently Asked Questions (FAQs) describing the technical requirements for meeting this law provision. Additionally, this credit is not available in 2023. The IRS is closely reviewing claims submitted under this provision, and taxpayers filing such claims do so at their own risk.

The IRS urges taxpayers to avoid these scams, as they falsely promise large refunds. Always rely on the trusted advice of a tax professional to ensure you are not falling prey to scam artists.

If you have questions about legitimate tax credits and financial planning, our CPAs are here to help. Contact us at 203-489-0629.