New Employer Tax Credit for Paid Family and Medical Leave Announced
On September 24, 2018, the IRS announced that eligible employers who provide paid family and medical leave to their employees may qualify for a new business credit for tax years 2018 and 2019.
In determining whether an employee is a qualifying employee in 2018, the employee must not have had compensation from the employer of more than $72,000 in 2017. Second, the policy must provide at least two weeks of annual paid family and medical leave for each full-time qualifying employee and at least a proportionate amount of leave for each part-time qualifying employee. Third, the policy must provide for payment of at least 50 percent of the qualifying employee’s wages while the employee is on leave. Fourth, if an employer employs qualifying employees who are not covered by Title I of the Family and Medical Leave Act, the employer’s written policy must include language providing “non-interference” protections, as described in Notice 2018-71. Thus, the written policy must incorporate the substantive rules that must be met in order for an employer to be eligible for the credit.
Please click here to determine how to calculate your credit. Remember, this is a credit, dollar for dollar, against your regular tax liability, so it is a huge benefit to both the employer and your employee.Source: CPA Practice Advisor and IRS