On Jan. 29, 2021, the IRS updated its frequently asked questions (FAQs) on tax credits available to employers for providing paid employee leave under the Families First Coronavirus Response Act (FFCRA). While the paid sick and family leave requirements of the FFCRA expired on Dec. 31, 2020, the law’s tax credits were extended for employers that voluntarily provide the leave to employees through March 31, 2021. The FAQ updates address this extension.
The FFCRA tax credits cover certain costs of the employee leave required by the law: employee wages, health plan expenses allocable to those wages, and the employer’s portion of the Medicare tax related to the wages.
Eligible employers may claim the credits on their federal employment tax returns (e.g., Form 941, Employer’s Quarterly Federal Tax Return), but they can benefit more quickly from the credits by reducing their federal employment tax deposits. For more information like this contact HRinDemand, your total people solution.
Melissa Marsh, SPHR, SHRM-SCP, is a human resources consultant and founder of HRinDemand, a human resources company in Reno, NV, offering expert guidance and easy-to-use tools to help small businesses with employment regulations, compliance, employee relations, and company growth.