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COVID-19 paid leave tax credit eligibility tool

Thomson Reuters has launched a new tool to help determine if an employer is eligible to take a tax credit for providing qualified leave wages for COVID-19 related reasons.

Background information

Under the Families First Coronavirus Response Act (FFCRA), certain employers were required to provide paid leave to workers who were unable to work or telework due to circumstances related to COVID-19 (Qualified Paid Leave). FFCRA offsets the costs of providing Qualified Paid Leave, up to certain amounts, with refundable tax credits against employment taxes for qualified leave wages taken beginning April 1, 2020, and ending December 31, 2020.

Paid sick and family leave

  • The paid sick and family leave credits, which previously were available only until the end of 2020 through the FFCRA, have been extended by the Consolidated Appropriations Act, 2021 (CAA, 2021) for periods of leave taken through March 31, 2021.
  • Eligible employers, those with fewer than 500 employees, may claim credit for paid sick leave and/or paid family leave for certain COVID-19 related reasons.
  • The requirement to provide paid leave was not extended therefore the tax credits are available through March 31, 2021 for employers who provide qualified leave wages voluntarily. 

The tax credit tool

The COVID-19 Paid Leave Tax Credit Tool does the following:
  • Asks a series of questions to help determine whether an employer is eligible to claim a tax credit for providing COVID-19 emergency paid sick leave and/or expanded family leave.
  • Provides a brief overview of the available tax credit and the recent extension.
  • Guides you through a series of Yes/No questions to determine if you are eligible to claim a credit for providing qualified leave wages in the 1st quarter of 2021.
  • Outlines the types of leave that qualify for the tax credit and also provides the maximum amounts of qualified leave wages eligible for the credit.
  • Explains how the employer can claim the credits.