COVID-19 paid leave tax credits for small and midsize businesses
Check out this tax credit for small and midsize business regarding COVID-19 Paid Leave. Remember, a tax credit is better than a tax deduction because it allows you to reduce the amount of tax owed dollar for dollar.
Small and midsize employers can claim two new refundable payroll tax credits. The paid sick leave credit and the paid family leave credit are designed to immediately and fully reimburse eligible employers for the cost of providing COVID-19 related leave to their employees.
Here are some key things to know about these credits.
• Employers receive 100% reimbursement for required paid leave.
• Health insurance costs are also included in the credit.
• Employers do not owe their share of social security tax on the paid leave and get a credit for their share of Medicare tax on the paid leave.
• Self-employed individuals receive an equivalent credit.
• Reimbursement will be quick and easy.
• The credit provides a dollar-for-dollar tax offset against the employer’s payroll taxes
• The IRS will send any refunds owed as quickly as possible.
To take immediate advantage of the paid leave credits, businesses should use funds they would otherwise pay to the IRS in payroll taxes. If those amounts are not enough to cover the cost of paid leave, employers can request an expedited advance from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
For details about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov.