Stay updated on all areas of tax filings and business processes affected by COVID-19

Learn more

Tax credits for COVID sick leave

One of the lesser known features of COVID tax relief is the employer tax credit for emergency paid sick leave related to COVID-19.  Unbeknownst to many small business owners, the CARES act requires business with under 500 employees to provide emergency COVID-19 related sick leave.  Luckily, the government will cover those wages through a payroll tax credit for the employer.  Below are some of the key points to remember with this program.

  • Leave can be taken for any of the following reasons

               Observing a quarantine order from the government

               Employee was advised by a physician to quarantine

               Employee is experiencing symptoms and seeking medical care

               Employee is caring for a family member that is sick

               Employee is caring for a child whose school or daycare has been closed

  • Sick or isolating employees are eligible for 100% of their regular wages, up to $511/day
  • Employees taking care of family are eligible for 2/3’s of their regular pay, up to $200/day
  • Full-time employees can take up to 80 hours of leave, while part time employees can take up to the average number of hours they work in a two-week period.
  • The Federal government will apply a credit to an employer’s Social Security taxes owed.  If the credit exceeds the liability it will be applied to future periods.
  • In addition, the credit will be increased to cover all Medicare taxes applied to those wages.
  • Finally, if the employer will receive a credit for any health plan costs associated with the leave.

While we are all dealing with the unprecedented changes that COVID-19 has wrought, it is encouraging that the government is trying to provide some relief to employees by mandating that sick leave be granted.  On the other hand, businesses will appreciate not having to cover wages for an employee that is not working.  If you have a business that is facing this issue, please feel free to reach out to us for additional information or help navigating the process.