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BHG Brief: Employee Leave Tax Credit Updates for Business Owners

Question: What do the Paid Sick Leave Credit and the Child Care Tax Credit mean for small business owners? 

Answer: Immediate tax credits to your business for employees who are taking leave for a variety of reasons, due to COVID-19.

COVID-19 has had a drastic impact on the daily lives of business owners, employees, and their families. To help ease the burden of navigating sick leave and childcare during this time, new tax credits have been introduced by the US Government. These credits are designed to help business owners take care of employees and their families while maintaining their businesses during this crisis.  

Paid Leave Credit & Child Care Leave Credit 

  • The Paid Sick Leave Credit allots employers a credit for up to 80 hours for each employee unable to work due to coronavirus-related illness, quarantine, or treatment 
  • An additional leave credit for up to 2/3 of each employee’s regular rate of pay is available for an extra 80 hours the employee is caring for someone else with the virus or a child whose school/daycare has closed due to COVID-19 
  • The Child Care Leave Credit is a credit equal to 2/3 of each employee’s regular rate of pay for up to 10 weeks, and is available in addition to the Paid Sick Leave credit 

Though running a business is challenging even in the best of times, taking advantage of tax credit opportunities during this crisis can help you take care of employees, and allow your business to continue to grow. For more details on options currently available to business owners, as well as situational examples from the US Treasury Department, IRS and US Department of Labor, click here

Source: IRS.gov