COVID-19 Paid Leave and Tax Credits

As reported in Federal Coronavirus Workplace Relief (March 23) and COVID-19 Gets Noticed (April 2) the March 18 Families First Coronavirus Response Act (FFCRA) requires most employers with fewer than 500 on payroll to provide paid sick and family leave wages for certain COVID 19-related absences.

The FFCRA includes employer tax credits to fully offset qualified leave amounts paid between April 1 and December 31, 2020, including an employer’s share of Medicare tax and its cost of maintaining absent workers’ health insurance coverage.

On March 31, 2020, the Internal Revenue Service published frequently-asked questions (FAQs) on steps to obtain these credits.

FAQ Nos. 12-13 and 37-43 detail how eligible employers can claim the credits on federal employment returns, including IRS Form 941.

Employers may reimburse themselves more quickly by drawing from their federal employment tax set-asides to matching leave pay-outs, claiming any remaining difference as a credit on a future return. See, Form 7200, Advance Payment of Employer Credits Due to COVID-19. Form 7200 Instructions include helpful background information and examples.

See also:

• When the Show Must Go On; Key Protection for an Employee’s Covid-19 Diagnosis/Symptoms (April 8, 2020)
• Safer at Home (April 3, 2020)
• Unemployment Goes Viral; Furlough or Layoff, Distinction without a Difference? (March 28, 2020)
• Workplace Safety Nets (March 27, 2020)
• Telecommuting in Response to Coronavirus Outbreak (March 18, 2020)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

April 9, 2020