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What is the SETC Tax Credit?

The SETC, meaning "Self-Employed Tax Credit", is a specific tax credit created to give financial relief to self-employed people who were negatively affected by the COVID-19 pandemic. This credit was implemented as part of the Families First Coronavirus Response Act (FFCRA) to support sole proprietors, independent contractors, gig workers, and other self-employed professionals experiencing economic challenges due to the pandemic.

officialsetcrefund of the key features of the SETC tax credit is that it is a refundable credit, not a loan. This means that entitled self-employed workers can get the credit as a refund, even if they have no tax liability. The credit essentially reduces their tax burden on a dollar-for-dollar basis, possibly leading to a significant increase in their tax refund.

The SETC tax credit seeks to offer self-employed workers financial support similar to the paid sick and family leave benefits typically offered to employees. By providing this credit, the government recognizes the unique challenges faced by the self-employed sector during the pandemic and aims to mitigate income disruptions and support greater financial stability for these professionals.