Wow! What a mess! Under the Families First Coronavirus Recovery Act, employers get a tax credit for wages paid out for emergency leave because of COVID-19 absences.
Figuring it out seemed ridiculously complicated, so we turned to Vince Heuser Attorney to get is up to speed. According to Mr. Heuser, the new law provides for payments to employees who are personally affected by COVID-19 or who have to care for family members who are affected.
Mr. Heuser created a table for us:
The employer then files a form (IRS form 7200) with the IRS to get the tax credit on the monthly or quarterly payroll return, Form 941:
It seems pretty straightforward with such a clear explanation! According to Mr. Heuser, employers can get more information here:
IRS page on the Tax Credit forms
Save Your Receipts and Records!
The tax credit is administered by the IRS so some employers will be subject to an IRS audit. DOL advises that an employer should retain appropriate documentation, including any needed substantiation to support the credit. For example, if an employee takes expanded family and medical leave to care for his or her child whose school or place of care is closed, or a child care provider is unavailable, due to COVID-19, it is advisable that the employer require documentation like that under the rules for FMLA requests. Documentation might also include such things as a notice that has been posted on a government, school or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care or child care provider.
Certification requirements under the FMLA remain in effect for employees taking leave for one of the existing qualifying reasons under the FMLA. If an employee is taking leave beyond the two weeks of emergency paid sick leave because of a medical condition related to COVID-19 that constitutes a serious health condition, an employee must provide medical certifications under FMLA if required by an employer.
Don’t forget the Tax Credit for Health Insurance Coverage
Employers can get an additional tax credit based on costs to maintain health insurance coverage for an employee during the FFCRA-covered leave period. How this will be handled is not yet clear.
Our thanks to the Heuser Law Office, 3600 Goldsmith Ln, Louisville, KY 40220, for the information.