The IRS and Treasury Department provided new information regarding the tax credits available through the American Rescue Plan (ARP). The ARP was created to help small businesses through the pandemic. This new guidance provides information on how eligible businesses can claim the credit for providing paid time off to employees receiving or recovering from the vaccine. Below, we’ve outlined which employers are eligible for the credits and when and how the credits can be taken.
Who is eligible?
Any business with fewer than 500 employees is eligible to take the tax credit. This includes tax-exempt organizations and governmental employers who are not the federal government or not outlined in section 501(c)(1) of the Internal Revenue Code. Self-employed individuals are eligible for similar credits.
What are the paid leave qualifications?
In order to qualify for the tax credit, employers/employees must meet the following guidelines:
The leave must be paid between April 1, 2021 to Sep. 30, 2021.
Employers must pay the wages for the sick or family leave.
Employees must qualify as not being able to work or telework due to reasons related to COVID-19, including the time taken to receive a COVID-19 vaccine or to recover from side effects from the vaccine.
For more information on the credits, including how they’re calculated, view the IRS Fact Sheet or reach out to our team of professionals.
Treasury Circular 230 Disclosure
Unless expressly stated otherwise, any federal tax advice contained in this communication is not intended or written to be used, and cannot be used or relied upon, for the purpose of avoiding penalties under the Internal Revenue Code, or for promoting, marketing, or recommending any transaction or matter addressed herein.