What Is the Tax Credit for Sick and Family Leave?

The credit for paid sick and family leave aims to help employers impacted by the coronavirus outbreak.

The Internal Revenue Service (IRS) has unrolled provisions to offer financial relief to taxpayers who have been affected by the coronavirus outbreak. One of those measures is the Tax Credit for Sick and Family Leave.

This credit applies to leaves taken by employees unable to work because they present coronavirus symptoms, because they have to take care of someone with coronavirus, or because they have to look after children because schools and daycares are closed due to the outbreak.

Employees Unable to Work Because They Have Coronavirus Symptoms

Employees unable to work due to the quarantine or because they have coronavirus symptoms, are entitled to a 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. This includes telework

Employees Who Care For Someone With Coronavirus

There are employees who can’t work because they have to care for someone with coronavirus, or because they have to care for a child because the child’s school or day care is closed due to the coronavirus. In those cases, 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 Must Take Care of a Child Due to Daycare or School Closure

This tax credit also covers employees unable to work because they need to care for children whose school or place of care is closed. Those workers 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 receive a credit in the full amount of 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.  The refundable credit is applied against certain employment taxes on wages paid to all employees. Eligible employers can reduce federal employment tax deposits in anticipation of the credit.

Two of Three New Tax Credits For Employers

The Paid Sick and Family Leave tax credits are two of three new tax credits geared to help employers. The other one is the Employee Retention Credit that we discussed previously here.

It’s important to know these and other measures to navigate the current circumstances. Our knowledgeable experts at JT Tax Services will help you so you can take advantage of all the relief initiatives you are eligible for.

We are located in Oxnard, California. Contact us by email, telephone or through our social media accounts on FacebookTwitter and LinkedIn to learn more about our services.