The American Rescue Plan extends two important tax benefits to small businesses: the Employee Retention Credit and the Paid Leave Credit. The Paid Leave Credit helps small businesses provide paid sick leave to their employees who had to take time off work to care for themselves or family members with COVID-19, and the plan was recently extended to include leave taken to receive or recover from the COVID-19 vaccine.
The original Emergency Paid Sick Leave Act went into effect on March 31, 2020 and applied throughout the year. If a small business provided paid leave to their employees in 2020 and has not claimed the credit, they should contact their tax advisor to see if they can file an amended payroll tax form and receive their refund.
The Paid Leave Credit is related to the amount of payroll taxes an employer pays for their employees, not the amount of income tax paid. Therefore, the tax credit applies to nonprofit organizations with paid employees and to those who are self-employed.
Under the extension of the Paid Leave Credit provided for in the American Rescue Plan, businesses with fewer than 500 employees can receive a payroll tax credit if they provide paid sick and family leave to their employees dealing with COVID-19 by claiming the credits on quarterly payroll taxes from now until September 30, 2021.
According to the Department of Treasury, the goal of these credits is to keep employees safe and encourage people to take time off when they are sick and schedule time to receive a COVID-19 vaccine.
More information is available <HERE>.
Reporting for WGRT – Jessie Wiegand
