The Internal Revenue Service (IRS) has put in place some provisions to offer financial relief to employers impacted by the coronavirus outbreak. Among those measures is the Credit for Sick and Family Leave.
This tax credit applies to the paid leave of employees unable to work because they show coronavirus symptoms, because they have to take care of someone with coronavirus, or because they have children whose school or place or care closed due to the coronavirus outbreak.
Employees Unable to Work Due to the Coronavirus Outbreak
Employees unable to work because of coronavirus quarantine or self-quarantine, or because they have coronavirus symptoms and are seeking a medical diagnosis are entitled to paid sick leave for up to ten days (up to 80 hours) at the employee’s regular rate of pay, or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $511 per day, but no more than $5,110 in total
Employees who Take Care of Someone With Coronavirus
It may also happen that an employee cannot work because they take care of someone with coronavirus, or because they take care of a child after the child’s school or place of care has been closed due to the outbreak, or because the paid child care provider is unavailable due to the coronavirus outbreak. In that case, the employee is entitled to paid sick leave for up to two weeks (up to 80 hours) at two-thirds the employee’s regular rate of pay or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $200 per day, but no more than $2,000 in total.
Employees Who Take Care of Children Due to Daycare or School Closing
This provision also contemplates the possibility of an employee not being able to work because their children’s daycare or school is closed. Employees in those situations are also entitled to paid family and medical leave equal to two-thirds of the employee’s regular pay, up to $200 per day and $10,000 in total. Up to ten weeks of qualifying leave can be counted towards the family leave credit.
How Much Is the Credit Worth?
Eligible employers are entitled to a tax credit equal to the required sick leave and family leave, plus related health plan expenses and the employer’s share of Medicare tax on the leave, for the period of April 1, 2020, through December 31, 2020. Eligible employers can reduce federal employment tax deposits in anticipation of the credit. They can also request an advance of the paid sick and family leave credits for any amounts not covered by the reduction in deposits.
One of Two Tax Credits Available to Employers
The Credit for Sick and Family Leave is one of the two tax credits that employer can claim to get financial relief during the coronavirus outbreak. The other one is the Employee Retention Credit.
The IRS’ response to COVID-19 is fluid, so it’s important to stay updated. You can check the IRS website or this blog. It’s also a good idea to get advice from an expert who can help you get advantage of the relief initiatives unrolled by the government.
At Meadville Tax Services we have the know-how and the drive to assist you so you can file your taxes efficiently, limiting your tax liability while staying compliant with federal tax regulations.