A Tax Credit For Helping Your Employees Get The Shot—3 Key Things Business Owners Should Know About The Updated Paid Leave Tax Credit

As our country begins to rebound from Covid-19, we see signs of progress. In fact, recently President Biden announced a new goal for 70% of adults to have at least one shot by Independence Day. During a recent event, Andy Slavitt, Senior Advisor to the White House Covid-19 Response Team, laid out the state of vaccinations in the United States. Nearly four out of five senior citizens have been vaccinated, while less than half of adult workers have received a vaccine. However, there is a silver lining to this information.

“The good news is that the vast majority are not opposed. They say they will get vaccinated, but three important things will influence them. They need it to be easier, they want to get their basic questions answered, and the more people they know who are vaccinated in the workplace and among their families, the more likely they are to do it themselves. So employers play a critical role in all three of those things,” he said.

Employers can make it easier for their employees to get vaccinated through guidance. In fact, the research shows that small businesses see vaccinations as a way to get their business and the economy up and running again. Additionally, Slavitt shared how employers are offering incentives for receiving the vaccine, such as paid time off. As part of a change under the American Rescue Plan recently passed by Congress, small businesses who give their employees paid time off for vaccinations can now take advantage of the paid leave tax credit.

Here are the three key things you need to know.

1. Available to fewer than 500 employees and the self employed: The paid leave tax credit allows businesses and organizations with fewer than 500 employees to claim refundable tax credits to be reimbursed for the cost of providing paid sick and family leave to employees because of Covid-19. This credit includes leave for Covid-19 vaccinations and time to recover and is available to eligible employers from April 1, 2021, through September 30, 2021. Self-employed individuals are also eligible for tax credits.

2. Fairly generous credit: The paid leave tax credit goes against the employer’s share of the Medicare tax and is refundable if it exceeds the employer’s share of the Medicare tax. It is equal to sick leave wages paid for Covid-19-related reasons for up to two weeks, or 80 hours, and is limited to $511 per day and $5,110 total. The tax credit for paid family leave wages is equal to family leave wages for up to twelve weeks and is limited to $200 per day and $12,000 total. More information can be found on the Internal Revenue Service’s Paid Leave Tax Credit Resource Center.

3. Easy to claim: Most eligible employers can claim the credit on Form 941, Employer’s Quarterly Federal Tax Return PDF, which is used by most employers to report income tax, as well as Social Security and Medicare taxes withheld from employee wages. If employers do not have enough federal employment taxes set aside, they can request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. Self-employed individuals can claim similar tax credits on Form 1040, U.S. Individual Income Tax Return.

“What you can do by taking advantage of this credit is keep that money that you have right now. In fact, if you have paid for more paid leave time than you actually have deposits right now, you can apply to the government and in a few weeks, you’re going to get that excess money back,” said Thomas West, Deputy Assistant Secretary for Business Domestic Tax in the Office of Tax Policy at the U.S. Department of Treasury, during the event.

Small businesses have been hit hard by the pandemic and the vaccines are the key to recovery. The paid leave tax credit provides extra assistance to business owners in getting the vaccine and supporting their employees in doing so.


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