Sick and Emergency Leave Tax Credits

What it is: Credits to be applied to offset the employer’s payroll tax in the amount equal to the amount paid for Families First Coronavirus Response Act (FFCRA) Sick Leave.

Background: FFCRA sick leave and emergency leave is mandated to be provided by employers with 500 or fewer employees. Exemption from the mandate may be available to some businesses under 50 employees. Wages paid as FFCRA leaves of absence can be immediately offset against federal payroll taxes in the same pay period. Click here to learn more.

Read the Families First Coronavirus Response Act

How to track leave and use the credits:

Track leave wages paid to employees using specially configured earnings code set up by PayNorthwest for you in the system. Contact us now to get these leave earnings codes set up in the system for you.

We will use the credits generated by your use of the leave earnings codes to offset your payroll taxes for the pay period.

If any credit remains over and above your payroll taxes, we can help you get that money back as quickly as possible

Other FFCRA-related resources and requirements:

HERE is a sample FFCRA leave request form with your employees.

HERE is the notice that FFCRA requires employers to post in a conspicuous location in the workplace (or each work location, if employees report to different buildings). Employees who are working from home must receive the notice as well.

Download the required FFCRA notice

FFCRA Notification Requirements FAQ

Fact Sheet for Employees

Fact Sheet for Employers

FFCRA Q&A Resource

Required Employer Documentation for Leave Tax Credits

The documentation required to claim an FFCRA payroll tax credit is listed below. Employers may not require more documentation from employees than is described. The IRS has a very helpful overview and FAQ that covers other common questions about the tax credits in detail.

Employers can substantiate eligibility for FFCRA sick leave or family leave credits by receiving a written request from the employee that includes the following:

  • Their name
  • The date or dates for which leave is requested
  • A statement of the COVID-19 related reason they are requesting leave and written support for such reason
  • A statement that they are unable to work, including by means of telework, for such reason.
  • For leave based on a quarantine order or self-quarantine advice, the request should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine. If the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee should be included.
  • For a leave request based on a school closing or child care provider unavailability, the statement should include the name and age of the child (or children) to be cared for, the name of the school or place of care that has closed, and a representation that no other person will be providing care for the child during the leave. If a child who needs care is 15 or older, the employee must affirm that there are special circumstances (but need not explain them) — the IRS otherwise assumes kids 15 and older can take care of themselves for the length of a workday.

According to the DOL, this is the extent of the documentation employers may require.

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