Sheet Metal & Air Conditioning Contractors’ National Association

Treasury, IRS and Labor announce plan to implement COVID-19-related paid leave for workers and tax credits for small and midsize businesses

Mar 21, 2020

Two new refundable payroll tax credits are now available to small and mid-size businesses for leave given to employees due to the coronavirus pandemic.

The tax credits provide employees paid sick leave and expanded family and medical leave because of the coronavirus pandemic. For eligible employers, it established the refundable paid sick leave credit and paid childcare leave credit.

The credits are meant for companies with less than 500 employees, covering their coronavirus-related leave costs on a dollar-for-dollar basis up to certain thresholds.

Workers can get as many as 80 hours of paid sick leave as well as expanded paid childcare leave when their children’s schools are closed or childcare providers are unavailable.

Under guidance to be released next week, qualifying businesses that pay sick or childcare leave under the new law can keep the same amount of payroll taxes as the leave they paid, instead of sending that amount to the IRS.

Companies can get up to $511 per day for a total of 10 days for each employee under the paid sick leave credit. For the family and medical leave credit, they can get up to $200 per day for up to 10 days for employees who take such time away from their job. Eligible employers can also receive a refundable childcare leave credit up to $200 per day for as long as 10 weeks.

Businesses can claim the credits based on qualifying leave they provide between the effective date and the last day of this year. Self-employed individuals under similar circumstances qualify for equivalent credits.

The IRS expects to process the tax credit claims within two weeks or less, with details of the new, expedited procedure to be announced next week.

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