Employers: New Payroll Tax Credits Available

On March 18, the Families First Coronavirus Response Act was signed, allowing small and mid-size employers to begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them for the cost of providing coronavirus-related leave to their employees. The provisions of the bill are outlined below.

Payroll tax credit for required paid family leave

  • Requires employers with between 50 – 500 employees to provide emergency leave when employees can’t work because of a need to care for their child under the age of 18 because school or daycare is closed
  • Includes a payroll tax credit equal to 100% of qualified family leave wages paid though 12/31/2020
  • The payroll tax credit is generally up to $200 per day per employee, with a maximum of $10,000 per employee
  • Self-employed individuals may also be eligible for a tax credit

Payroll tax credit for required paid sick leave

  • Part of the bill requires employers with between 50 – 500 employees to provide up to 80 hours of paid sick time through 12/31/2020 if the employee can’t work because of being quarantined or caring for someone who is quarantined. The requirement also applies to those caring for children whose daycare or school is closed because of coronavirus
  • Includes a payroll tax credit equal to 100% of the qualified sick leave wages paid
  • The payroll tax credit is generally available for up to $511 in wages (for workers who are quarantined or self-quarantined or who have COVID-19) and wages up to $200 for other workers for each day an employee receives qualified sick leave pay
  • The credit is available for up to 10 days per calendar quarter
  • Self-employed individuals may also be eligible for a tax credit

It’s very important for businesses to have a mechanism in place to track this information so they can receive the maximum tax credits available. Please reach out to your LWBJ tax professional for more information on how these changes could impact you.

Additional resources available on lwbj.com

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