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Paid Sick Leave and Paid Family/Medical Leave Tax Credits

Employers subject to the requirements are entitled to a refundable tax credit equal to 100 percent of the qualified sick leave wages and family/medical leave wages paid by the employer, subject to the limits discussed above (also listed below for reference). The credit can be increased by certain specified health expenses (such as, employer-paid health plan premiums) that are excluded from employees' income.

The tax credit reduces the amount of federal employment taxes that must be deposited with the IRS, usually within a few days of the payroll date. This is intended to provide the funds needed to pay sick and family/medical leave benefits under the law. However, in some cases, such as complete closure of a business, the Treasury Department and IRS intend to process claims for advance payments of the tax credit.

Paid Sick Leave Tax Credits
  • The tax credits for qualified paid sick leave wages are capped at:
    • up to $511/day and $5,110 total (per person) for employee illness or quarantine
    • up to $200/day and $2,000 total (per person) for care of others or school closures
  • Tax credits are applied against employer Social Security/Medicare taxes reducing the amount that must be deposited with the IRS on a semi-monthly or monthly basis.
  • Employers are reimbursed if their costs for qualified leaves exceed the taxes they would owe.1
  • Federal or state governments or political subdivisions are not eligible to take advantage of the tax credits.2
Paid Family and Medical Leave Tax Credits All full and part-time employees who cannot work or telework
  • The tax credits for qualified PHEL wages are capped at:
    • up to $200/day and $10,000 total (per person)
  • Tax credits are applied against employer Social Security/Medicare taxes reducing the amount that must be deposited with the IRS on a semi-monthly or monthly basis.
  • Employers are reimbursed if their costs for qualified leaves exceed the taxes they would owe.1
  • Federal or state governments or political subdivisions are not eligible to take advantage of the tax credits.2
1 Awaiting further guidance from the US DOL regarding reimbursement procedures
2 Awaiting further guidance from the US DOL public sector employers

This information is provided as a courtesy to assist in your understanding of the subject matter covered and on the impact of certain regulatory requirements and should not be construed as tax or legal advice. Such information is by nature subject to revision and may not be the most current information available.

This information is provided with the understanding that CASA Payroll Service is not rendering legal advice or other professional services. Consult experienced counsel and/or tax advisors for legal advice and review your jurisdictional requirements.
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