COVID-19 Paid Leave Tax Credit

Eligible employers are entitled to tax credits for wages paid for certain leave taken by employees related to the COVID–19 pandemic.

Keeping up with the ever-changing eligibility guidelines and filing requirements can be overwhelming. Leave the heavy lifting to our team of tax incentive experts. Take these time-consuming tasks off your plate :

  • Ensuring your client is matched with the credits and incentives that are most appropriate for their needs
  • Collecting necessary data and documentation and completing complex calculations
  • Create an audit-ready tax incentive package that clearly identifies each key component of the calculation and supporting documentation

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Beginning in early 2020 as part of the first COVID-relief law, businesses with fewer than 500 employees were required to provide paid sick leave and paid family leave to employees who were dealing with certain consequences of the ongoing pandemic.

Under the law, businesses may be entitled to a tax credit equal to 100% of the paid sick leave and paid family leave provided to employees, up to a certain level.

COVID-19 Paid Leave Tax Credit Eligibility Guidelines

The COVID-19 Paid Leave Tax Credit is available to a business that meets these eligibility requirements:

  • Are a business with under 500 employees
  • Offered paid sick or family leave to your employees after April 1, 2020
  • Had employees take paid leave due to illness, quarantine, or caregiving

COVID-19 Paid Leave Tax Credit Overview

The sick leave rules required businesses to provide up to 80 hours of paid leave at either:

1. The employee’s regular wage, capped at $511/day up to a total of $5,110, if the employee was sick or quarantining; or

2. Two-thirds the employee’s regular wage, capped at $200/day up to a total of $2,000, if the employee was taking time to care for someone else who was quarantining or a child whose school or child care was closed due to COVID.

The family leave rules required businesses to provide up to ten additional weeks of leave for employees who are unable to work because they need to care for children whose school or normal child care is not available due to COVID. Those employees are entitled to two-thirds of their regular wages, capped at $200/day up to a total of $10,000.

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COVID-19 Paid Leave Tax Credit in 2021

Although the law no longer requires businesses with 500 or fewer employees to offer paid leave as part of the continuing COVID-relief efforts, if a business does provide paid leave to its employees then it can claim these dollar-for-dollar tax credits for wages paid through September 30, 2021. These credits can be claimed against payroll taxes on a quarterly basis, improving cash flow in the very near-term.

Offering paid sick and family leave will help keep the virus under control by ensuring sick employees can stay home. Your business can claim additional tax credits in 2021 by continuing to offer paid leave.

Identifying your COVID-19 Paid Leave Tax Credit savings is easier than ever.

Fill out the form to discuss your company or client's eligibility and potential savings.