UPDATED 3/29/2020
Families First Coronavirus Response Act (HR6201)
Legal / Employment Details on FFCRA:
Business Owner impacts
Eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.
The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
Every dollar of required paid leave (plus the cost of the employer’s health insurance premiums during leave) will be 100% covered by a dollar-for-dollar refundable tax credit available to the employer.
Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period. More information pending from the IRS.
If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure have not been announced.
Example:
If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
Employer caps
The credit for Emergency Paid Sick Leave wages for each employee who must self isolate, obtain a diagnosis, or comply with a self-isolation recommendation with respect to coronavirus is capped at $511 per day and $5110 in aggregate max.
The credit for Emergency Paid Sick Leave wages to each employee caring for a family member or for a child whose school or place of care has been closed is capped at $200 per day or $2000.00 in aggregate max.
The credit for Emergency Family and Medical Leave wages is capped at $200 per day for each individual and $10,000 per individual for all quarters.
Feel free to reach out to Paula, Molly, or me with any questions. Also continue to follow EDGe on social media and on our EDGe blog for updates on other small business assistance measures.
Eric Glymph
Financial Strategist / Founder
EDGe Business Planning
www.EDGeBusinessPlanning.com