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Tax Credits Available Now For COVID-19 Paid Leave, IRS Says

By Amy Lee Rosen · March 20, 2020, 8:59 PM EDT

The IRS said Friday it was immediately implementing a recently enacted law that provides a dollar-for-dollar tax offset against payroll taxes to businesses with fewer than 500 employees who provide paid leave due to the COVID-19 virus.

Employers can take immediate advantage of the two new refundable payroll tax credits for businesses that provide coronavirus-related paid leave for workers to attend to their own health needs or to help ailing family members, according to the announcement by the Internal Revenue Service, the U.S. Department of the Treasury and the Department of Labor. Starting Friday, businesses can retain funds they would otherwise pay to the IRS in payroll taxes to recoup the credit, the agency said. If those funds are not sufficient, employers can claim the credits on a streamlined form that will be released the week of March 23, the IRS said.

The provisions were enacted Wednesday in the Families First Coronavirus Response Act, H.R. 6201. For employees who cannot work because they have self-quarantined due to coronavirus, the law provides employers a paid sick leave credit for the employee's regular rate of pay up to $511 per day for 10 days, or $5,110 in total, the agency said. For employees who are caring for someone else with coronavirus, the employer can obtain a credit for two-thirds of the employee's pay, up to $200 per day up to 10 days, and $2,000 in total.

A separate child care leave credit in the law provides employers with a payroll tax credit equal to two-thirds of an employees pay, capped at $200 per day or $10,000 in total for workers who are unable to work because they must care for a child whose school closed or whose regular childcare is unavailable, the IRS said.

--Editing by John Oudens.

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