Over the last eighteen months, Congress passed a series of laws to help employers meet their payroll needs and incentivize them to retain employees. Each law passed added new layers to the previous legislation. These laws provided sick and family leave tax credits available to most small employers (less than 500 employees).
You may be eligible for refunds of payroll taxes already paid or be eligible to have future payroll tax deposits lowered. Even self-employed individuals are eligible.
Note – The first legislation required small employers to pay sick and family leave wages. However, employers with fewer than fifty employees were often exempt from that requirement. Later legislation did not require small businesses to pay for sick and family leave, but instead made credits available to those who did pay it.
The Families First Coronavirus Response Act (FFCRA) required businesses with less than 500 employees to provide PAID sick leave. The FFCRA applied from April 1, 2020 through December 31, 2020. This paid sick leave covered up to 80 hours for the employee’s Covid-19 related issues, and/or to care for other family members’ Covid-19 related issues
After the FFCRA, Congress passed the American Rescue Plan (ARP). The only significant difference from the FFCRA is …. The ARP paid sick leave is optional for the employer. This optional period runs from April 1, 2021 through September 30, 2021.
Both the FFCRA and the ARP included a provision for an additional 10 weeks (400 hours) for employees who could not work to care for a child whose school or place of care was closed due to Covid-19 issues. Again, the FFCRA family leave for 2020 was required while the ARP provision for 2021 is optional.
AMOUNT OF THE CREDIT
The calculation of the credit is a maze of possibilities. Contact our office if you believe the FFCRA or the ARP apply to you. However, the amount of credit can be sizable. If you paid your employees for time away to handle Covid-19 issues, we strongly recommend that you contact our office to discuss your situation in more detail.
IF YOU ARE SELF-EMPLOYED
You as the business owner (separate from being an employer) may also be eligible for these tax credits. Contact our office if you experienced any Covid-19 related illnesses, quarantines, and/or family member illnesses or quarantines.