The COVID-19 pandemic that has swept across the world has prompted a number of changes that affect employers. These changes involve paid sick leave, paid family and medical leave, and the tax credits associated with those policies. Here’s what you need to know.
How does COVID-19 affect employees’ paid sick leave?
If an employee cannot work because of COVID-19, then you as their employer must provide them with paid sick leave. This policy applies to employees who have been advised or ordered to self-quarantine and employees who are caring for someone who is in quarantine. It also applies to employees who must care for their children as a direct result of the crisis. This emergency sick leave is not counted as part of the employee’s regular sick leave or paid time off. It also applies to both full-time and part-time employees. Employees may use this sick time at any time from April 2 through the end of 2020.
Can you claim tax credit for your employees’ emergency sick leave?
Yes, you may claim a full tax credit for your employees’ emergency paid sick leave. You will be reimbursed after your quarterly payroll reports have been submitted. What if you have a C Corporation or S Corporation and you are your own employee? If that’s the case, then you still qualify for paid sick leave if you must take time off work because of COVID-19.
How does COVID-19 affect employees’ paid family and medical leave?
Employees who must take time off to care for their child because of the closing of their school or childcare service can receive as much as 12 weeks of family and medical leave. This leave may be unpaid for the first 10 days. However, employees can still use their regular paid sick leave or their emergency sick leave during that time. After that, you must pay employees at least two-thirds of their regular pay.
Can you claim tax credit for your employees’ family and medical leave?
Yes, you can claim a tax credit for this leave at the time that your quarterly payroll reports are submitted. You may claim up to $200 per day—and $10,000 in total—for each employee.
The Royce CPA Firm is here to provide you with the smart, professional guidance you need at this difficult time. If you want to make sure that you’re preparing your taxes correctly, get in touch with us today for an appointment.