Paid leave for employees impacted by COVID-19 in 2021
Payroll tax credits available for certain employers
TAX ALERT |
Authored by RSM US LLP
The American Rescue Plan Act of 2021 (Act) enacted in March contained many tax provisions, including a payroll tax credit for COVID-related paid leave provided to employees in 2021. These paid leave provisions build upon the paid sick leave and paid family leave rules applicable to 2020 under the Families First Coronavirus Response Act (FFCRA).
The FFCRA was passed in March of 2020 and imposed paid leave requirements on employers with fewer than 500 employees. Employees impacted by certain COVID-19 events were eligible for paid sick leave and paid family leave from April 1, 2020 through Dec. 31, 2020. Employers providing this paid leave were entitled to payroll tax credits on their 2020 Forms 941, Employer’s Quarterly Federal Tax Return. For more details, see our article regarding payroll tax relief for employers.
The Consolidated Appropriations Act passed in December of 2020 allowed employers to voluntarily provide paid sick leave and paid family leave to employees from Jan. 1, 2021 to March 31, 2021, under the same terms as applied to 2020. Under the new Act, paid leave can be provided on a voluntary basis from April 1, 2021 through Sept. 30, 2021. Eligible employers can claim payroll tax credits on their 2021 Forms 941 for the applicable quarters.
Although the new Act incorporates many provisions from the FFCRA, there are some differences. For example, employees can receive paid leave if they are seeking or awaiting the results of a COVID-19 medical diagnosis or test due to exposure to the virus or because their employer has requested the diagnosis or test. In addition, paid leave can be provided to employees obtaining immunizations related to COVID-19 or recovering from any injury, disability, illness or condition related to such immunizations. Furthermore, certain governmental entities that are tax-exempt under section 501(c)(3) are now eligible for the payroll tax credit.
Call us at +1 213.873.1700, email us at email@example.com or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Jill Harris and originally appeared on 2021-04-22.
2020 RSM US LLP. All rights reserved.
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.