As the United States continues to adopt legislation focused around COVID-19 and tax credits, it can be difficult to keep up with all the changes. While trying to file your taxes for 2020, you may have stumbled across the 7202 form. Today, we are going to explain what this form is, who it applies to, and what it does.
At Bennett CPA LLC, we understand the difficulties of filing taxes as a self-employed individual or as a small business. Compared to a person who is traditionally employed, there are many more forms to be aware of. By utilizing our tax help in Colorado Springs, the filing process becomes clear, simple, and easy.
Form 7202 Explained
The first and most important question to address is “what is form 7202 used for?” This document is a way for self-employed individuals to get tax credits for missing work due to the coronavirus. It has two options. The first is that if you contracted the virus and missed work, then you can get credits for lost wages. The second is that if someone in your household, like a family member or child, got the virus and you took care of them, then you can receive credits.
How to File Form 7202
As you begin the process of filing, you will find this form on Schedule C. Depending if you were ill or caring for someone who was sick will affect how you fill out the form. Unfortunately, free tax software lacks nuance and cannot navigate the limitations of this form for you. You will need to be aware of the restrictions to avoid a potential audit. If you are unsure if you have filled out form 7202 correctly, seek out professional accounting and tax services.
Form 7202 Requirements
The form is relatively straightforward to fill out, but you will need a calculator, tax software, or a tax accountant to ensure the math is done correctly. To complete the form, you must first establish how many days you were unable to work due to the coronavirus. If you experienced being sick yourself and had to care for a family member at a separate point in the year, keep the total number of days separate for each situation. Having your calculated net earnings as a self-employed individual nearby will also be helpful. From here, you plug in the respective amounts and complete the form.
Form 7202 Credit
The amount of tax credit you receive differs between the type of leave. For the sick variety, you get up to $511 a day, whereas for the family option you get up to $200 per day. This is why it is important to distinguish the number of days you were unable to work depending on the situation. There are limitations to how much this document covers; make sure you fill it out correctly and avoid common mistakes. The IRS has a helpful about page if you need it.
Professional Tax Preparation in Colorado Springs | Bennett CPA LLC
Never feel overwhelmed by tax forms again with Bennett CPA LLC. As a CPA in Colorado Springs, we have the skills needed to tackle all of the new documents for the 2020 tax year. Years of experience have equipped us with the knowledge and expertise to clarify, simplify, and streamline your filing process. Contact Bennet CPA LLC today to get started.