Payroll Tax Credits & Deferrals Available Due to COVID-19

6/8/2020 - By Jeanne Profita

Updated Tuesday, June 9, 2020.

There are many payroll tax credits and deferrals available for employers through the opportunities provided by the Family First Coronavirus Response Act, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and other programs. Below is a breakdown of what qualifies for a payment or credit:

Family First Coronavirus Response Act (FFCRA)

Qualified sick and qualified family leave wages (Emergency Paid Sick Leave Act - EPSLA) – up to 80 hours per year expanding Family and Medical Leave Act (FMLA)
Refundable payroll tax credit equal to 100% of required emergency sick leave – capped at either $2,000 or $5,110 per employee depending on the reason:

Is subject to a federal, state, or local quarantine
Has been advised by a healthcare provider to self-quarantine
Is experiencing symptoms of COVID-19
Is caring for an individual subject to an order to quarantine
Is caring for a child if school or place of care has closed

Refundable payroll tax credit equal to 100% of expanded FMLA – capped at $10,000 per employee
Qualified sick leave wages are not subject to employer share of Social Security taxes
Tax credits increased by qualified health expenses and employer share of Medicare taxes
Wages paid between April 1, 2020, and December 31, 2020
Employers can use their Payroll Protection Payment (PPP Loan) to pay for wages during an FFCRA leave and can either receive loan forgiveness on those amounts or a tax credit for the wages, but not both
Qualifies for Advance Payment using IRS Form 7200*

Coronavirus Aid, Relief, and Economic Security (CARES) Act

Refundable payroll tax credit equal to 50% of qualified wages paid to employees – capped at $5,000 per employee
Wages paid between March 13, 2020, and December 31, 2020, due to:

Operations being fully or partially suspended or
Gross Receipts for the quarter were 50% less than the same quarter in 2019

Qualifies for Advance Payment using IRS Form 7200*

Payroll Tax Deferrals Available Due to COVID-19

If an employer received a PPP Loan and have their indebtedness forgiven, they are eligible for deferrals
Deferring Tax Deposits of Employer Share of Social Security tax from March 27, 2020, and January 1, 2021

Pay 50% of deferral by December 31, 2021
Pay 50% of deferral by December 31, 2022

*IRS Form 7200 (Advance Payments of Employer Credits Due To COVID-19): Eligible if paid qualified sick or family leave wages or the employee retention credit are greater than the amount of employment tax deposits.

HOW WE CAN HELP

Business owners and management teams are always striving to achieve more with less. Effective finance and accounting support are critical and can be an asset with timely execution, reliable data, reduced risk, and insight for making decisions. If you need assistance navigating which tax credits, deferrals, or payments apply to you, please contact a member of our Outsourced Accounting Solutions Team.