Tax Credits Support Businesses Coronavirus Vaccination Efforts 1080x675 1

It is believed that for many working Americans, the main obstacle in the way of getting vaccinated is the concern of taking unpaid time off. With the race for herd immunity through vaccinations and the prediction that vaccination supply will soon outnumber those interested in getting the COVID-19 vaccine, the government has again turned to employers to help bridge the gap.

Funded through the American Rescue Plan Act of 2021, there is now an added incentive for employers of small and midsize businesses, and certain governmental employers, to help get their workforce vaccinated. Companies will be able to claim refundable tax credits to reimburse the costs associated with providing paid time off to employees getting vaccinated, as well as paid sick and family leave for employees needing additional time to recover if experiencing vaccine side effects.

These tax credits are now available to eligible employers from April 1, 2021, through September 30, 2021. Here are some of the major points:

  • Employers with fewer than 500 employees, including those self-employed, are eligible.
  • Employers are entitled to tax credits for wages paid for leave taken by employees who are not able to work or telework due to reasons related to COVID-19. This includes leave taken to receive COVID-19 vaccinations or to recover from any injury, disability, illness, or condition related to the vaccinations.
  • The paid leave credits are tax credits against the employer’s share of the social security and Medicare tax. These tax credits are refundable, which means the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the social security and Medicare tax.
  • The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19-related reasons, for up to two weeks (80 hours) and up to $511 per day.
  • Eligible employers report their total paid sick and family leave for each quarter on their federal employment tax return, usually Form 941. Form 941 is used by most employers to report income tax and social security and Medicare taxes withheld from employee wages, as well as the employer’s own share of social security and Medicare taxes.
  • In anticipation of claiming the credits on the Form 941, eligible employers can keep the federal employment taxes that they otherwise would have deposited.
  • Self-employed individuals may claim comparable tax credits on their individual tax return Form 1040.

As is the case with the many government pandemic aid packages for businesses, employers will need to be diligent about documentation and the necessary applications to receive full tax credit reimbursement. Employer Advantage is standing by to help businesses take full advantage and navigate the accounting details.

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