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IRS FAQs on tax credits for required paid leave provided employees by SMEs (COVID-19)

IRS FAQs on tax credits for required paid leave

The IRS today posted a list of “frequently asked questions” (FAQs) concerning tax credits for required paid leave provided by small and midsize employer (SME) businesses.

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The Families First Coronavirus Response Act (date of enactment of March 18, 2020) allows refundable tax credits that reimburse SMEs, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees for leave related to the coronavirus (COVID-19) pandemic.

The law provides funds for employers with fewer than 500 employees to be used to provide employees with paid sick and family and medical leave for reasons related to COVID-19, either for the employee's own health needs or to care for family members. Workers may receive up to 80 hours of paid sick leave for their own health needs or to care for others and up to an additional 10 weeks of paid family leave to care for a child whose school or place of care is closed or child care provider is closed or unavailable due to COVID-19 precautions. The measures cover the costs of this paid leave by providing small businesses with refundable tax credits. Certain self-employed individuals in similar circumstances are entitled to similar credits.

The FAQs (April 17, 2020) provided by the IRS address in 67 questions, issues concerning the sick and family leave credit.

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