Self-employment tax credit.

 

Recently, social media influencers and marketers have been promoting a so-called “self-employment tax credit.” However, no such credit exists. The misinformation has become so rampant that the IRS recently issued a consumer alert. The alert warns self-employed filers of the misleading credit and urges taxpayers to speak with a trusted tax professional, rather than unreliable social media sources.

This is especially important now, with the IRS recently announcing the start of the 2025 tax filing season. The IRS is urging taxpayers to prepare and be aware of changes affecting their 2024 returns, as well as recommending taxpayers create an online account for secure access to tax information.

Regarding the so-called “self-employment tax credit,” what these influencers are actually pushing is a COVID-era tax credit for sick leave and family leave. This credit was available for self-employed individuals who missed time from work due to the COVID-19 pandemic. It was designed to function similarly to credits available to employers at the time. These credits allowed employers to offset the cost of paying their employees when they couldn’t work for COVID-related reasons.

The credit, incorrectly referred to recently on social platforms as a “self-employment tax credit,” was claimed using Form 7202. However, this previous credit expired on September 30th, 2021. It may be possible that a taxpayer qualified for the credit in tax years 2020 or 2021 but failed to claim it at that time. If that’s the case, the taxpayer may be able to amend their returns to claim the credit retroactively.