Small and midsize employers can claim two new refundable payroll tax credits. The paid sick leave credit and the paid family leave credit are designed to immediately and fully reimburse eligible employers for the cost of providing COVID-19 related leave to their employees.
Here are some key things to know about these credits.
- Employers receive 100% reimbursement for required paid leave.
- Health insurance costs are also included in the credit.
- Employers do not owe their share of social security tax on the paid leave and get a credit for their share of Medicare tax on the paid leave.
- Self-employed individuals receive an equivalent credit.
- Reimbursement will be quick and easy.
- The credit provides a dollar-for-dollar tax offset against the employer’s payroll taxes
- The IRS will send any refunds owed as quickly as possible.
To take immediate advantage of the paid leave credits, businesses should use funds they would otherwise pay to the IRS in payroll taxes. If those amounts are not enough to cover the cost of paid leave, employers can request an expedited advance from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
If you are a customer of Corporate Payroll Services and have signed the appropriate consent form, Form 7200 will be automatically generated for you and transmitted to the IRS on your behalf if a refund is owed to you. Having the form automatically generated by us helps reduce errors and allows you to receive your refund in a timely manner. Please reach out to your dedicated payroll specialist to receive the consent form which needs to be completed in order to begin this process.
If you are not a Corporate Payroll Services Client, we would love to have you on board and are ready to help you with your payroll and other applicable needs during this time. Contact us today to learn more.