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San Jose, CA 95128

Are Tax Credits Available to Employers Affected by COVID-19?

Posted on in Employment Taxes

San Jose, CA tax attorney employer tax credits

Since the beginning of March, it is an understatement to say that COVID-19 has greatly impacted business owners, employees, and the workplace nationwide. Most businesses have either gone remote, closed temporarily, or shut their doors for the last time. Not only are the businesses themselves leaving many people without work, but those who become infected with COVID-19 or are required to self-quarantine may be unable to work even if they are employed. In order to address the financial impact of coronavirus, the Internal Revenue Service (IRS) has implemented two new employer tax credits to help U.S. employees who have been affected by the global pandemic.

Sick and Family Leave

There are multiple credits tied to requests for medical leave since you may not necessarily be requesting this absence from work for your own self. The following are the employer credits to which you may be entitled:

  1. Credit for personal leave: Those who are unable to work, both in-person and remotely, due to COVID-19 quarantine, symptoms, or a medical diagnosis are entitled to paid leave. This is available for up to 10 days at the employee's average pay rate. Those who get paid the federal minimum wage rate are owed up to $511 per day and have a total pay cap of $5,110.

  2. Credit for caring for a patient: If one of your family members is diagnosed with COVID-19, you may be responsible for caring for him or her. You are eligible for up to 2 weeks of paid sick leave at two-thirds of your regular pay rate. Those employees who get paid minimum wage can earn up to $200 per day and $2,000 total for the leave period.

  3. Credit for childcare: Many daycare centers and schools have been closed due to the pandemic to keep children safe from the virus. Unfortunately, this leaves many parents unable to work since they will need to care for their kids in the absence of their normal childcare services. These working parents are entitled to paid family and medical leave, earning two-thirds of their regular pay, up to $200 per day and $10,000 total.

  4. Credit for employers: Certain employers are eligible to receive a sick and family leave credit, in addition to related health plan expenses and their share of Medicare tax while on leave. This is available from April 1, 2020, to December 31, 2020. This credit is applied against particular employment taxes on the funds paid to employees. These employers are able to reduce federal employment tax deposits for the purpose of this credit. Any amounts that are not covered by the reduction in deposits can be requested in advance.

Employee Retention Credit

The IRS is also providing funds to businesses that have been partially or fully closed due to COVID-19 or those who have seen a significant decline in income compared to their receipts from 2019. The employee retention credit is a refundable tax credit of up to 50 percent of $10,000 in qualified wages -- this includes health plan expenses -- paid after March 12, 2020, through December 31, 2020. 

Contact a San Jose, CA Tax Lawyer

It is no secret that times have been hard for business owners and employees alike. Employers may be struggling to pay their employees, leaving both themselves and their workers in jeopardy. It is important to know which tax credits are available to you and your employees to reduce the pandemic’s financial burden. John D. Teter Law Offices assists clients with finding all of the tax credits that may apply to their situation to help them get through these unprecedented times. Whether you are an employer or employee, Attorney John D. Teter is here to help protect your rights. Call our experienced San Jose, CA tax attorney at 408-866-1810 to schedule an initial consultation.




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