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With the passing of the American Rescue Plan, employers are entitled to claim refundable tax credits to offset the cost of providing paid sick and family leave to their employees due to COVID-19. This includes paid time related to getting a COVID-19 vaccination or needing to recover from any illness or condition related to the vaccinations.
The tax credits are available to eligible employers that pay sick and family for leave from April 1, 2021, through Sept. 30, 2021. Eligible employers include any business, including tax-exempt organizations, with fewer than 500 employees.
Eligible employers can receive a credit for up to two weeks at 100% of the employee’s regular rate of pay. A tax credit for paid family leave wages is also available equal to the family leave wages paid for up to 12 weeks, at two-thirds of the employee’s regular rate of pay.
According to recent Internal Revenue Service (IRS) guidance, employers should report total paid sick and family leave wages for each quarter on their federal Form 941 to claim the credit. These wages should include the eligible health plan expenses, collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages.
If an employer anticipates claiming the credit, they can keep the federal employment taxes they would have deposited, inclusive of:
Advance payments of the credits can be requested by completing Form 7200.
Doeren Mayhew’s tax advisors stand ready to help you take advantage of all the COVID-19 related tax credits available to your business. Contact us today!
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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