From its office in Clayton, Missouri, Danna McKitrick, P.C., delivers legal representation to new and growing businesses, financial institutions, non-profit and government-related entities, business owners, individuals, and families throughout the greater St. Louis region and the Midwest.
Danna McKitrick attorneys practice across many areas of law, both industry- and service-oriented.
The American Rescue Plan of 2021 (ARP) is now providing a tax credit for paid sick or family leave related to COVID-19 and the COVID-19 vaccinations. Employers can claim tax credits for the wages paid to employees for paid leave due to issues arising from COVID-19, including leave taken to receive or recover from COVID-19 vaccinations, from April 1-September 30, 2021.
To be eligible, your business must have fewer than 500 employees. Tax-exempt organizations qualify as well as governmental employers, other than the federal government and any agency or instrumentality of the federal government that is not an organization described in section 501(c)(1) of the Internal Revenue Code. Additionally, self-employed individuals are entitled to similar tax credits.
Under ARP, employers may claim tax credits to cover the following:
Eligible paid sick leave wages for a maximum of two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100% of the employee’s regular rate of pay
Family leave wages for a maximum of 12 weeks at two-thirds of the employee’s regular rate of pay limited to $200 per day and $12,000 in the aggregate
Eligible employee qualified health plan expenses that are allocable to qualified sick leave wages and family leave wages
The employer’s share of social security and Medicare taxes imposed on those wages, and
Pension plan and apprenticeship program contributions made by employers under a collective bargaining agreement that are allocable to employee sick and family leave.
The credits will be taken against the COVID-19 paid leave credits, which are credits against the employers’ share of the Medicare tax that has been paid. If an employer does not have enough federal taxes withheld to cover the amounts paid for sick or family leave and other eligible expenses, the employer may apply for an advance for the credits, using Form 7200, Advance Payment of Employer Credits Due to COVID-19. The employer would then account for the advanced credits when they file their Form 941 for the relevant quarter.
