COVID -19 payroll tax credits

Have you had employees who have come down with the COVID-19 and provided paid sick leave?

Is one of your employees having to take time off from work to take care of a child?

Please see if you can qualify for the Paid Sick Leave Credit or the Expanded FMLA credit.

Paid Sick Leave Credit

The EPSLA requires employers to provide employees with paid sick leave if the employee is unable to work (including telework) due to any of the following:

1. The employee is under a Federal, state, or local quarantine or isolation order related to COVID-19
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis
4. The employee is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19
5. The employee is caring for the child of such employee if the school or place of care of the child has been closed, or the child care provider of such child is unavailable, due to COVID–19 precautions
6. The employee is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services.

An employee who is unable to work for reasons due to a COVID-19 circumstance described in (1), (2) or (3) above is entitled to paid sick leave for up to two weeks (up to 80 hours) at their regular rate of pay, or, if higher, the federal minimum wage or any applicable state or local minimum wage, up to $511 per day and $5,110 in the aggregate.

An employee who is unable to work due to a COVID-19 circumstance described in (4), (5) or (6) above is entitled to paid sick leave for up to two weeks (up to 80 hours) at two-thirds thier regular rate of pay or, if higher, the federal minimum wage or any applicable state or local minimum wage, up to $200 per day and $2,000 in the aggregate.

The employer is entitled to a fully refundable tax credit equal to the required paid sick leave.

This tax credit also includes the employer’s share of Medicare tax imposed on those wages and its allowable cost of maintaining health insurance coverage for the employee during the sick leave period (qualified health plan expenses).

The employer is not subject to the employer portion of social security tax imposed on those wages.

Expanded FMLA Credit

In addition to the paid sick leave credit, under the expanded FMLA, an employee who is unable to work (including telework) because of a need to care for a child whose school or place of care is closed or whose child care provider is unavailable due to COVID-19, as described in (5) above, is 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 the aggregate.

Up to 10 weeks of qualifying leave can be counted towards the family leave credit.

Employers are entitled to a fully refundable tax credit equal to the required paid family and medical leave (qualified family leave wages).

This tax credit also includes the employer’s share of Medicare tax imposed on those wages and its cost of maintaining health insurance coverage for the employee during the family leave period (qualified health plan expenses).

Employers are not subject to the employer portion of social security tax imposed on those wages.
Payment of Credits

Employers are entitled to receive a credit in the full amount of the qualified sick leave wages and qualified family leave wages, plus allowable qualified health plan expenses and the employer’s share of Medicare tax, paid for leave during the period beginning April 1, 2020, and ending December 31, 2020.

The credit is allowed against the taxes imposed on employers by section 3111(a) of the Internal Revenue Code and section 3221(a) of the code (the Railroad Retirement Tax Act Tier 1 rate) on all wages and compensation paid to all employees.

These credits are allowed for on the 941 quarterly return, Part 1, line 13c and 13d.

Talk with the company that processes your payroll.

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