Employer Payroll tax credits for COVID-19 related paid leave

Subject to the caps, the Act provides a 100% payroll tax credit to employers for wages paid under both the FMLA and the Paid Sick Leave portions of the Act.  

• Employers may claim a credit against payroll tax liability for each calendar quarter (i.e., a dollar for dollar tax offset).  

• If the credit exceeds an employer’s payroll taxes for a calendar quarter, the excess is generally refundable.

• If payroll taxes necessary to cover the cost of qualified sick and family leave paid are insufficient, employers will be able to file a request for an accelerated payment from the IRS.

• Equivalent family leave and sick leave credit amounts available to self-employed individuals who may claim leave credit on their personal income return.

• Paid sick leave:  $511 per employee per day for leave taken for qualifying reasons 1, 2, or 3 above; and $200 per employee per day for leave taken for qualifying reasons 4, 5, or 6.

• Paid family and medical leave:  Employers may be able to claim a credit of up to $200 per employee per day for any paid COVID-19-related FMLA leave provided to employees.  This credit is capped at an aggregate of $10,000 for all calendar quarters per employee.

• An employer’s tax credit is increased by the amount the employer pays to maintain health care related to new sick leave and FMLA benefits. This will allow a company to maintain health care benefits while the employee is on leave.

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Lázaro Law Group
321 S. Plymouth Ct Suite 1250,
Chicago, IL 60604

Rafael E. Lazaro
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