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New Employment Tax Credits Under Families First Corona​virus Response Act

MWE Advisor Masthead - New Employment Tax Credits Under Families First Corona​virus Response Act

President Trump has signed into Law the Families First Coronavirus Response Act (FFCRA). The FFCRA requires that certain employers provide expanded paid leave and/or emergency family leave to certain employees. The requirements vary based on several factors including the employer’s number of employees, the length of time the employee has been employed by the employer and the reasons for the leave.

The FFCRA provides tax credits to employers who provide paid leave pursuant to the law. The credits are to be claimed on the employer’s quarterly payroll tax return. These credits are refundable in situations where the credits exceed the amount the employer owes in payroll taxes.

The amount of these credits depends on the type of pay and the amounts paid with respect to each employee during the period beginning on the effective date and ending December 31, 2020. The credits are generally calculated as follows:

  • Paid sick leave – 100 percent of the qualified sick leave wages paid. The credit is limited to $511 per day with respect to any individual for up to 10 days the employee takes time off to care for themselves (either while quarantined, under an isolation order or experiencing symptoms of COVID-19 and seeking a medical diagnosis) or $200 per day for up to 10 days if the employee is caring for a qualified individual (a son or daughter out of school or child care due to COVID-19 precautions). The credit may be increased by certain qualified health plan expenses.
  • Qualified Family Leave wages – 100 percent of the qualified family leave wages paid as required by the Emergency Family and Medical Leave Act. The credit is applied against the employer’s share of the payroll tax for each employee. The credit is limited to $200 per day and a total of $10,000 per employee.

Credits are also available to self-employed workers against their self-employment taxes.

The FFCRA was signed by the President on March 18, 2020 and will go into effect 15 days after signing.

If you have any questions about the credits available under the Families First Coronavirus Response Act, please contact a member of your MWE engagement team.

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