| Eligibility | Business with fewer than 500 employees who are required to provide additional paid sick and family leave due to the FFCRA
Leave Qualifications 1. Employee is under quarantine related to COVID-19 2. Employee has been advised to self-quarantine COVID-19 3. Employee is experiencing symptoms of COVID-19 4. Employee is caring for an individual in quarantine 5. Employee is caring for the child if the school or place of care closed due to COVID–19 6. Employee is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services
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| Credit Amount
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Fully refundable tax credit equal to the required paid family and medical leave for the period 4/1/2020 – 12/31/2020:
– For conditions 1,2,3 – paid sick leave for up to 80 hours at the employee’s regular rate of pay, or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $511 per day and $5,110 in the aggregate – For conditions 4,5,6 – paid sick leave for up to two weeks (up to 80 hours) at 2/3 the employee’s regular rate of pay or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up to $200 per day and $2,000 in the aggregate
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| Special Considerations | Credit includes employer’s share of Medicare tax & cost of maintaining health insurance coverage for the employee during the leave period
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| Wage Exclusions
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Wages associated with employee retention credit are not eligible as refundable amounts for paid sick leave credit
*Employers can apply both FFCRA and Employee Retention credits, but the credits cannot apply to the same wages paid by the employer
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| Effect on Other SBA Loans
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PPP Loan forgiveness will be reduced by tax credit amounts
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| How to receive the credit | Eligible Employers will be able to retain an amount of all federal employment taxes equal to the amount of the qualified leave wages paid, plus the allocable qualified health plan expenses and the amount of the employer’s share of Medicare tax imposed on those wages, rather than depositing them with the IRS.
Employers can file Form 7200, Advance of Employer Credits Due To COVID-19, to claim an advance credit instead of retaining amounts
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| Documentation Requirements | Must retain records and documentation supporting each employee’s leave to substantiate the claim for the credits, as well retaining the Forms 941
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Employee Retention Credit
| Eligibility | Any employer (all corporations, pass through entities and sole proprietors), regardless of size that:
OR
*Also applies to tax exempt organizations that meet item 1.
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| Credit Amount
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50% of qualified wages paid by the employer for the period 3/13/2020 – 12/31/2020
*Qualified wages for all calendar quarters in 2020 cannot exceed $10,000 per employee
– Employers with more than 100 full-time employees, qualified wages include wages paid to employees when they are not providing services due to a governmental order related to COVID-19. – For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether or not the employee is providing services to the employer.
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| Limitations | If an employee is performing services on a reduced schedule, qualified wages may not exceed the amount the employee would have been paid for working an equivalent period
*Qualified wages do include certain healthcare costs paid by an employer to maintain a group health plan
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| Wage Exclusions
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Wages associated with the FFCRA credit are not eligible as qualified wages for the employee retention credit
*Employers can apply both credits, but the credits cannot apply to the same wages paid by the employer
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| Effect on Other SBA Loans
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Employers cannot get both a small business loan under the PPP and also claim a tax credit |
| How to receive the credit | Eligible Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.
If an employer’s tax deposits are not sufficient to cover the credit, form 7200, Advance Payment of Employer Credits Due to Covid-19, may be submitted
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| Documentation Requirements | Report total qualified wages and the related health insurance costs for each quarter on quarterly employment tax returns or Form 941 beginning with the second quarter.
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Payroll Tax Deferral
The CARES Act allows for employers and self-employed individuals to defer the payment of the employer portion of the Social Security payroll taxes made after 3/12/2020 through 12/31/2020. All employers and self-employed individuals are eligible with the exception of those that have had a debt forgiven under the Payroll Protection Program. Remittance of deferred taxes can be done in two equal installments with 50% due on 12/31/2021 and the remaining 50% due on 12/31/2022. Employers should work with their payroll service provider to immediately begin deferrals.
We at Lovelace Payne are committed to bringing you the most relevant and up to date information in an effort to help your business stay on track during this period of uncertainty. Please note that not all provisions, exceptions, exclusions, and special circumstances are included in order to maintain brevity. Please reach out directly so that we can provide the business support you need in these unprecedented times. We are here for you, contact us today at wecare@lovelacepayne.com or 972-629-9164.
| John Payne | Terry Lovelace | Caitlin LeMaire | Ross Pasekoff |
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| Dallas office: | Fort Worth office: |
| 16610 North Dallas Parkway Suite 2700
Dallas, TX 75248
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1635 Rogers Road
Fort Worth, TX 76107 |
Treasury Circular 230 Disclosure – To comply with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this written communication (including any attachment) is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding tax penalties that may be imposed on the person. If this written communication contains any tax advice that is used or referred to in connection with the promoting, marketing or recommending of any transaction(s) or matter(s), this written communication should not be construed as written to support the promoting, marketing or recommending of the transaction(s) or matter(s) addressed by this written communication, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. No limitation has been imposed on disclosure of the tax treatment or tax structure of the transaction(s) or matter(s).
