The Tax Cuts and Jobs Act created a federal tax credit for employers who provide paid leave under the Family and Medical Leave Act (FMLA) for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2020.
The credit is equal to 12.5 percent of wages paid to qualifying employees during any period in which such employees are on leave under FMLA, provided the rate of payment is 50 percent of wages normally paid to the employee. The applicable percentage is increased by 0.25 percentage points (but not to exceed 25 percent) for each percentage point by which the rate of payment exceeds 50 percent. Wages incurred but unpaid do not qualify for the credit.
FMLA requires an employer with 50 or more employees (within a 75-mile radius) to provide eligible employees 12 weeks of unpaid, job-protected leave per year under one of the following circumstances:
Wages paid for vacation leave, personal leave, medical or sick leave do not qualify as FMLA leave.
In order for your business to claim the employer credit there are circumstances revolving the employer and the specific employee situation that needs to be considered, as outlined below:
Eligible Employer: For purposes of the FMLA credit an eligible employer is an employer that has a written policy in place meeting the following requirements:
Qualifying Employee: For purposes of the FMLA credit a qualifying employee is an employee who meets the following requirements:
It’s not uncommon that you have one to two, if not more, employees out each year due to the FMLA. Make sure your taking advantage to recoup some costs related to them being out. Check with Doeren Mayhew’s tax advisors to determine if you have a situation available for the credit.
Want to reach the author? Email Nicole Preston or contact her at 248.244.3252.
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