In 2021 the American Rescue Plan Act (ARP) was created to help with relief of all types during COVID-19. Since then, the IRS has updated it’s paid sick and family leave tax credits. These updates include the ability for employers to claim tax credits if they provided paid leave to employees that took family members or other certain individuals to obtain a COVID-19 vaccine, as well as during vaccine recovery. These details can be found on the IRS frequently asked questions (FAQs) page.
These tax credits have been put in place to help cover the cost of employers providing paid sick and family leave for anything related to COVID-19. They have made it very clear in their FAQs that this includes any employee that took leave to care for family members who needed to get immunization against COVID-19. Furthermore, it included the need to take leave in order to care for a family member recovering from COVID-19 reactions. An important detail to note is that this is not only available to companies but this tax credit is also eligible to self-employed individuals.
You might notice the similarity between these new tax credit updates under the ARP and those under the FFCRA (Families First Coronavirus Response Act). The FFCRA was an extension of the Tax Relief Act of 2020 and stated that employers were able to receive tax credits if they offered paid sick and family leave for employees whose circumstances met the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. Basically, the tax credits under the FFCRA applied to leave taken from April 1,2020 through March 31, 2021; whereas, ARP tax credits apply to leave from April 1, 2021 through September 30, 2021.
You can find how to file and calculate the credit amounts and how to receive advance payments for the credit and refund on the IRS FAQs page or talk to your tax preparer. There are various other credits for which you may be able to include on your tax return or additional filings. These include credit for sick or family leave as well as the employee retention tax credit. Be sure to claim any and all credits for which you qualify.
If you have a business and are trying to figure out if you are eligible for credits, we are here to help! Contact us for a quote and learn all of the services available to help you and your small business. We can be reached at 310-534-5577 or email@example.com.
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