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IRS Issues New Resources on FFCRA Leave Tax Credits

The Internal Revenue Service (IRS) has issued a new fact sheet and a “snapshot” document detailing the tax credits — which are available through September 30, 2021 — for employers who opt to provide family leave and paid sick leave under the Families First Coronavirus Response Act (FFCRA) and the American Rescue Plan Act (ARPA).

The new resources coincide with President Biden’s recent announcement calling for employers to take additional steps to help their employees and communities receive vaccination against COVID-19.

Under the ARPA, the paid sick leave credit is designed to allow qualified businesses — those with fewer than 500 employees and who pay “qualified sick leave wages” — to receive a credit to fund the cost of paid employee leave taken for specific COVID-19-related reasons including:

  • a period of self-quarantine
  • taking time off to receive a vaccination
  • experiencing post-vaccination side effects; or
  • experiencing COVID-19 symptoms and seeking medical diagnosis.

For paid sick leave, the tax credit limit is $511 per day and $5,110 total. For paid family leave, the tax credit limit is $200 per day and $12,000 total.

Employers may claim the credits on their deferral employment tax returns — Form 941, Employer’s Quarterly Tax Return — but they can benefit more quickly from the credits by reducing their federal employment tax deposits. If needed, an eligible employer may request an advance of payment of the credits from the IRS by submitting Form 7200.

We encourage employers to monitor updates from their state departments of labor for new laws, rules and guidance surrounding COVID-19 and employee leave. Additionally, the White House is asking employers to share how they are taking proactive steps to help their employees and communities receive vaccination. To do so, employers can input information about their efforts via an online form here.

For additional information, click here.

Questions? Contact the dedicated leave experts that comprise MedLeave Solutions, LLC by calling 844-438-3652 or emailing fmla@medleavesolutions.com. For pertinent updates surrounding leave law and compliance, visit MedLeave’s LinkedIn page!