IRS Adds, Updates FAQs on FFCRA Tax Credits

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calendar January 4, 2021
| 2 Minute Read

IRS Adds, Updates FAQs on FFCRA Tax Credits

The IRS has added or updated more than 80 answers to questions in its series of   FAQs on “COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses.” The changes affect questions in all 13 of the subtopics covered by the FAQs.
 
Refundable tax credits are available to businesses for employee paid leave taken under the federal Families First Coronavirus Response Act (FFCRA), enacted in March 2020 and effective through Dec. 31, 2020.
 

FFCRA Paid Leave

Under the FFCRA, employees of businesses with fewer than 500 employees may receive up to 80 hours of paid sick leave for their own health needs or to care for others. These employees are also eligible for up to an additional 10 weeks of paid family leave to care for a child whose school or place of care is closed, or child care provider is closed or unavailable due to COVID-19 precautions.


FFCRA Tax Credits for Paid Leave

The FFCRA tax credits provide employers with funds to cover certain costs of the employee leave required by the law. Specifically, the tax credits are available for:
• Qualified sick leave wages;
• Qualified family leave wages;
• Qualified health plan expenses allocable to employee leave wages; and
• The employer’s portion of Medicare tax related to the qualified wages.
 

The FAQs

The IRS FAQs on the FFCRA tax credits cover the following main issues:
• Eligible employers
• Qualified sick leave wages
• Qualified family leave wages
• Qualified health plan expenses
• How to claim the credits
• Substantiating eligibility
• Deductibility of tax credits
• Interaction of tax credits
• Third-party payers
• Self-employed individuals
 

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Combined HR Services provides practical human resources information and guidance based upon our experience in the industry and our experience with our clients.  Combined HR Services are not intended to be a substitute for professional advice.  Combined HR Services are designed to provide general information to human resources and/or business professionals regarding human resources situations commonly encountered.  Given the changing nature of federal, state and local legislation and the changing nature of court decisions, Combined HR Services cannot and will not guarantee that the information is completely current or accurate.  Combined HR Services do not include or constitute legal, business, international, regulatory, insurance, tax or financial advice. 
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