FAQs on Tax Credits for Paid Sick and Family Leave

Posted by BAS - 01 July, 2021


As employers are getting ready to file their second quarter tax statements, they may wish to refer to new Frequently Asked Questions posted by the IRS. The IRS released FAQs to help employers with claiming credits for leave taken by employees for certain paid sick and family leave reasons.

The American Rescue Plan Act allows eligible employers to claim refundable tax credits as reimbursement for the cost of providing sick and family leave payments to employees who receive up to 10 days of paid sick leave or 12 weeks of paid family leave between April 1, 2021 and September 30, 2021 for the employee’s own health needs or to care for family members. The tax credits under the ARPA are similar to those under the Families First Coronavirus Response Act (FFCRA) through which employers could receive tax credits for providing paid leave to employees that met the requirements of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. The ARPA extends these credits from April 1, 2021 through September 31, 2021 and expands the reasons for offering paid leave. Employers are not required to provide leave, but if an employer voluntarily provides paid sick and family leave wages that would have satisfied the requirements of the FFCRA, the employer may take a tax credit for the cost of providing the leave.

The IRS’ Frequently Asked Questions provides guidance for claiming the tax credit. Specifically, the FAQs address:

Topics: HR & Benefits Compliance, HR & Benefit Plans, HR & Benefits News, Technology News

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