The recently passed American Rescue Plan included a stipulation that allows certain employers to claim refundable tax credits that will reimburse them for the cost of providing paid sick leave if their employees suffer from Covid–19 or need to take time off for Covid–19 vaccinations. These tax credits are available from April 1 through September 30, 2021. Below, we’ve explained a few more details about them.
The IRS describes an eligible employer as “any business, including a tax–exempt organization, with fewer than 500 employees.”
Amount of the Credits:
The amount of the credits you claim will depend entirely on how many of your employees need to take paid leave due to Covid–19 or the Covid–19 vaccinations as well as the length of time that they‘re unable to work. The IRS notes that the tax credit for paid sick leave is “equal to the sick leave wages paid for Covid–19 related reasons for up 80 hours, limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee‘s regular rate of pay.” With regard to paid family leave, the credit is equal to the “family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at two–thirds of the employee‘s regular rate of pay.” That said, there are other elements that may increase the employer‘s credit amount such as “allocable health plan expenses, their share of social security, and Medicare taxes paid on the wages.”
How to Claim Them:
To begin, we recommend keeping careful records of the total paid sick and family leave wages that fall into this category from April to September for each employee. Then, you‘ll need to use this form to “report the total paid sick and family leave wages for each quarter.” Also of note is that if you don‘t have enough funds to cover the paid leave at the time in which they’re needed, you can request an advance of these credits here. If you need help with this, our accountants are happy to assist you to ensure that you complete the process correctly and receive the full amount that you’re eligible for.