Federal Sick Leave During Covid-19

Story by Ratliff CPA Editor
March 23, 2020

On Friday, March 20, 2020 the US Treasury Department and the Department of Labor announced Federal sick leave (up to 80 hours) for small and medium sized companies.

This money will come in the form of a payroll tax credit. If the employer cannot afford to wait for the payroll tax credit then the employer can apply for an accelerated payment (this form is not yet available).

There are two different types of paid leave. There is paid leave for child care due to schools being closed. This is paid at 2/3 of the employee’s regular pay when childcare is unavailable. Depending on the circumstances, this benefit may be able to extend for an additional 10 weeks. This benefit is capped at $200 per day or $10,000 in the aggregate for up to 10 weeks.. Employers may be eligible for additional credits for the costs of maintaining the health insurance for the employee out for child care.

The second type of paid leave is when the employee is quarantined and/or experience COVID-19 symptoms and is seeking a diagnosis. This is paid at 100% the employees pay rate. This is capped at $511 per day or $5,110 in the aggregate for a total of 10 days.

Payroll Tax Credit

When you pay your employees you are still required with withhold the federal income and FICA taxes and then deposit these taxes with the IRS and file your quarterly form 941. More guidance will be released the week of 3/23/2020 on how to retain monies to get your tax credit on COVID-19 Federal Sick and Paid Leave benefits. https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus


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