Thursday, October 4, 2018

Are you planning to take advantage of the IRS's employer tax credit for paid family and medical leave?

When Congress reformed the tax law earlier this year, one key change that might have flown under your radar is an employer tax credit for paid family and medical leave.

The IRS has a helpful Q&A available here.

The quick and dirty is that if:

  • You have a written policy that provides employees with at least two weeks annually of paid family and medical leave (that is, leave for a reason that would otherwise qualify for unpaid leave under the FMLA, whether or not you are covered by the FMLA or the employee is eligible for FMLA leave); and
  • The written policy applies to all full-time employees, and, on a prorated basis, to all part-time employees; and  
  • The paid leave is not less than 50 percent of the wages normally paid to the employee; and
  • The written policy is separate from your vacation, sick leave, or general paid-time-off policy; and
  • The employee worked for you for more than a year, and earned no more than $72,000 in 2017

Then you are eligible for a general business tax credit equal to a percentage of the amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year.

If you have questions about whether you can take advantage of this tax credit, and if so, how, speak with your employment and tax counsel, as well as your accountant.

* Photo by TJ Dragotta on Unsplash