Presently the credit is offered only for 2018 and 2019 tax years. The business tax credit is for employers that offer paid medical and family leave under the new tax law; equal to percentage ranging from 12.5%-25% of wages paid to eligible employees while on medical and family leave. The percentage depends on the circumstances.

Main factors: The employer is obligated to have a written policy that:

  • while the employee is on leave, employer pays at least half of their wages;
  • allows a minimum 2 weeks of leave per year for each full-time employee; and
  • gives leave to all qualified employees.

Other requirements are: The IRS has provided new FAQs, which describe qualified employer obligations, minimum paid leave requirements, calculation of the tax credit, types of leave covered, and the effect of state-mandated leave on the availability and calculation of the credit. Original FAQs that answer different questions can also be reviewed.

Exception to the credit. If state law requires an employer to provide the leave, the credit is not allowed. The IRS still plans to provide detailed assistance in the form of new regulations. The credit currently is offered only 2018 and 2019 tax years.

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