By Kyle Bryant, CPA, Founding Partner — Tax and Business Consulting Services
The Families First Coronavirus Response Act (FFCRA), H.R. 6201 was signed into law by President Trump on March 18, 2020.
Employers with fewer than 500 workers are mandated by the Act to provide 80 hours of paid sick leave and up to 12 weeks of paid family leave for certain employees affected by COVID-19 who have worked at the company for at least a month. The Act also provides a series of payroll tax credits to employers and self-employed individuals to help cover lost income due to the COVID-19 outbreak.
These credits below can be claimed on the quarterly payroll tax filings equal to 100% of the qualified leave wages paid. The credit will be applied to the tax the employer pays for each employee’s Social Security on their quarterly payroll tax returns.
Required Paid Family Leave - Payroll Tax Credit
Employers with less than 500 employees are required to provide public health emergency leave at two-thirds their regular salary when an employee is unable to work due to the need to care for a child under the age of 18 because their school is closed or regularly paid child care provider is unavailable.
Subject to certain limitations, the bill provides a payroll tax credit to the employer for 100% of the qualified leave wages paid by the employer. The credit is generally available for up to $200 in wages per day and is capped at $10,000 per employee.
Required Paid Sick Leave - Payroll Tax Credit
Employers with less than 500 employees are required to provide up to 80 hours of paid sick leave through the end of the year if an employee is unable to work due to being quarantined or self-quarantined for having COVID-19, caring for someone that has COVID-19, or caring for children whose school has been closed for COVID-19 precautions.
The credit is generally available for up to $511 per day in wages ($5,110 total) if an employee is taking time off to care for themselves or $200 in wages per day ($2,000 in total) if the sick leave is to care for an individual or a minor child whose school is closed.
We encourage you to speak with an attorney regarding the employer laws related to these credits, as there are certain exemptions for employers with less than 25 employees who do not have to provide job-protection.
Keep an eye on our blog for continued updates regarding COVID-19 and related tax implications.