The IRS have recently announced that eligible US employers who provide family and medical leave to their employees may qualify for a new business credit for the 2018 and 19 tax years.
Eligible employers that have set up certain paid family leave programs or amend existing programs by December 31st, 2018 will be eligible to claim the new employer credit.
The details of the family and medical leave credit were published in Notice 208-71 and clarifies how to calculate the tax credit. The credit is equal to a percentage of wages paid to qualifying employees while they are on family and medical leave. Generally, this amount should not exceed $72,000 for the credit to be claimable.
Are you eligible?
In order to be eligible to claim the credit, you must have a written policy that satisfies certain requirements:
· The policy must cover all qualifying employees who have been employed for a year or more and were not paid more than a specified amount during preceding year. Generally speaking, the employee must not have had compensation from the employee of more than $72,000 in the 2017 tax year.
· The policy must provide at least 2 weeks of annual paid family and medical leave for each qualified full-time employee and at least a proportionate amount of leave for each qualified part-time employee
· The policy must provide payment of at least 50% of the qualifying employee’s wages while the employee is on leave.
· For employers who employ qualified employees who are not covered by title I of the FMLA, your policy must include language providing ‘non-interference’ protections.
Please not that if any leave that is paid by a State, local government or local law is not taken into consideration for any purpose in determining the amount of paid family and medical leave provided.