REQUIREMENTS: Employers must have a
written policy in place that meets certain requirements, including providing:
- At least two weeks of paid family and medical leave (annually) to all qualifying employees who work full time (prorated for employees who work part time), and
- The paid leave is not less than 50 percent of the wages normally paid to the employee.
DISQUALIFICATIONS:
- If you give a general vacation/sick/personal leave allowance, that does not qualify. See the FAQ for list of 6 items that specifically qualify for the tax credit. It needs to be separate and additional family and medical leave allowance of paid time off (in addition to OR separate from vacation pay).
- If you are required by State or local law to provide paid medical or family leave time, you also do not qualify for a federal tax credit. This would disqualify employers in St Paul and employers in Minneapolis with more than 5 employees. If you need refresher on local Sick and Safe Time laws, please see Minneapolis or St Paul rules on Safe and Sick Time Requirements.
The above restrictions do limit who can claim the credit, but it may be worth reviewing your policies and making an adjustment (or actually write them down for the first time) if you are potentially eligible. The credit can be 12.5-25% of wages, so pretty valuable if it applies.
Contact Us if you believe you may qualify for the credit OR want to qualify for the credit in 2019. The Intuit Payroll system has options to track and separate Sick Pay wages to make it clear which wages qualify (if you meet all the other requirements). We can set up Sick Pay Accruals to track available paid time off for each employee as well.
Thanks!
Fox Tax Team
