The U.S. Department of Treasury, IRS and Department of Labor have announced plans to implement Coronavirus-related paid leave for workers and tax credits for businesses with fewer than 500 employees. This is part of the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.
Since most of my clients have fewer than 50 employees, I will focus on this segment.
Note: companies with 50 or more employees have additional requirements as it relates to the child care leave portion of the Act.
Paid sick leave, related to COVID-19, is required in certain situations. Like when your local government requires non-essential retail businesses to close or an employee is exhibiting symptoms of Coronavirus, just to name a couple.
Here’s a summary of the paid sick leave:
Examples
* If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
* If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
For specific details of the Act, please click on this link: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus
Since most of my clients have fewer than 50 employees, I will focus on this segment.
Note: companies with 50 or more employees have additional requirements as it relates to the child care leave portion of the Act.
Paid sick leave, related to COVID-19, is required in certain situations. Like when your local government requires non-essential retail businesses to close or an employee is exhibiting symptoms of Coronavirus, just to name a couple.
Here’s a summary of the paid sick leave:
- Paid sick leave is available from April 1 through December 31, 2020.
- Employees of eligible employers can receive up to 80 hours of paid sick leave, up to $511 per day or up to $5,110 in the aggregate, for a total of 10 days.
- Employers receive 100% reimbursement for paid leave pursuant to the Act, which also includes the employer paid portion of health insurance.
- Employers are reimbursed in one or two ways, first by a dollar-for-dollar payroll tax offset, and then if necessary, an IRS refund that will be processed within two weeks.
Examples
* If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
* If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
For specific details of the Act, please click on this link: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus
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