One of the key strategies deployed in fighting the COVID-19 pandemic is achieving a high vaccination rate. Previously, the IRS has offered tax credits to employers who provide paid time off for employees to get their COVID-19 vaccines. The Treasury Department has now announced that this credit has been expanded to cover paid time off for workers to take family members to get the vaccine.
The Background of This Tax Credit?
This credit is a provision of the $1.9 billion COVID-19 relief law, the American Rescue Plan (ARP). In April, the Treasury Department said that certain employers would be eligible for the credit if they provided time off for each employee who needed time to get and recover from the vaccine.
The paid leave tax credits are used against the employer's share of Medicare taxes. These credits are refundable, meaning an employer is entitled to a refund of any credits that exceed the employer's share of annual Medicare tax.
Eligible employers can claim tax credits that add up to the amount of wages paid to give their employees paid time off for getting a vaccine themselves or taking a family member to get the vaccine. Employers can also extend paid time off for employees to care for individuals who are recovering from getting the shot.
Who Qualifies for the Tax Credit?
This tax credit is available to businesses and tax-exempt organizations with fewer than 500 employees, those who are self-employed, and some governmental employers. The credit is equal to the wages paid out to provide paid sick leave or family leave between April 1, 2021 and September 30, 2021.
Eligible employers can keep the federal employment taxes that they would otherwise have deposited. Because the credit is refundable, this can include:
● federal income tax withheld from employees.
● employees' share of Medicare taxes and social security.
● eligible employer’s share of Medicare taxes and social security.
The amount held back by employers can be equal to the amount of the credit for which they are eligible. Employers must still file form 941, Employer's Quarterly Federal Tax Return, in order to claim the credit. Eligible employers can request an advance if they lack sufficient federal employment taxes on deposit to cover the total anticipated tax credits.
Knowing that it is easy for your employees to find the time to get vaccinated means peace of mind for everyone involved. Don't forget to take advantage of this valuable credit while helping your community reach full vaccination.