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IRS Guidance on Tax Credits for Employee Leave Under the FFCRA

The Internal Revenue Service (IRS) has released an updated Frequently Asked Questions (FAQs) and resources document that provides additional explanation and clarification related to the tax credits available under the Families First Coronavirus Response Act (FFCRA) and continued under the American Rescue Plan Act (ARPA) through September 30, 2021. The tax credits apply to small and midsize employers (fewer than 500 employees).

Key topics covered by the IRS FAQs include:

  • Eligible employers
  • Qualified sick leave wages
  • Qualified family leave wages
  • Qualified health plan expenses
  • How to claim the credits
  • Periods during which credits apply
  • Substantiating eligibility
  • Deductibility of tax credits
  • Interaction of tax credits
  • Third-party payers
  • Self-employed individuals

The IRS FAQs have not been updated since ARPA amended the tax credit provisions in March 2021. However, after the ARPA was passed, the IRS issued a fact sheet and a “snapshot” on the topic. As questions remained, additional clarifications have been issued to further assist employers with the administration of the provisions.

Read the HR Compliance Overview.

Contact your Cowden representative for more information on this or other compliance issues.