Tax Credits Available for Providing Paid Leave for Vaccines

Businesses fewer than 500 employees may claim a tax credit under the American Rescue Plan from April 1, 2021 through September 21, 2021. The credit is for wages paid for leave taken by employees to receive or recover from the COVID-19 vaccine.

This refundable tax credit is against the employer’s share of Medicare tax. Eligible employer may claim the tax credits within certain limits.

According to the IRS, “in anticipation of claiming the credits on the Form 941, eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees' share of social security and Medicare taxes and the eligible employer's share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. The Form 941 instructions explain how to reflect the reduced liabilities for the quarter related to the deposit schedule.”

Here is the IRS Fact Sheet for more information: https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paid-leave-due-to-covid-19.

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