Tax Updates for Family Leave Credit
The Family and Medical Leave Act (FMLA) generally entitles eligible employees of covered employers to unpaid, job-protected leave for specified family and medical reasons. The family leave credits, which previously were available only until the end of 2020, have been extended for periods of leave taken through March 31, 2021.
Qualified family leave wages are wages provided when an employee is unable to work or telework due to:
Caring for someone with coronavirus or
Caring for a child because the child's school or place of care is closed, or
The paid childcare provider is unavailable due to the coronavirus.
The IRS states that employers are entitled to a paid family leave credit for paid family leave provided to an employee equal to 2/3 of the employee's regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted towards the family leave credit.
Eligible employers are entitled to immediately receive a credit in the full amount of the paid sick leave and family leave plus related health plan expenses and the employer's share of Medicare tax on the leave provided through March 31, 2021. The refundable credit is applied against certain employment taxes on wages paid to all employees.