The White House announced a new paid leave tax credit designed to incentivize employers to encourage their employees to get a COVID-19 vaccination. Paid leave includes both time off for employees to actually get the shot(s) and also any necessary recovery time. The provision is a component of the American Rescue Plan Act (ARPA).
Employers who have less than 500 employees are eligible, including tax-exempt organizations. This credit also applies to self employed individuals.
The tax credit for paid sick leave can be claimed by employers that offer up to 80 hours (10 workdays), limited to $511 per day (and $5,110 total, at 100% of their regular rate of pay) to each employee who elects to receive a COVID-19 vaccine.
If you are offering the paid sick and family leave for COVID-19 vaccinations, you can claim the tax credit for time off wages granted between April 1, 2021 and Sept. 30, 2021. When filing, if you do not have enough federal employment taxes set aside to cover amounts provided as paid sick and family leave, you may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.
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