Alert: IRS Releases Guidance on New Family and Medical Leave Tax Credit

Medical and Family Leave Tax Credit

Last month, the IRS announced detailed guidance on the new business tax credit for 2018 and 2019 for employers who provide paid family and medical leave to workers.

Employers who don’t yet offer leave may still be able to claim the credit, retroactive to the beginning of their tax year, if they set up a qualifying paid family leave program or make changes to their current program before December 31, 2018.

The credit, announced as part of the Tax Cuts and Jobs Act, is equal to a percentage of wages paid to qualifying employees while they are on leave, which can be for any of the same purposes allowed under FMLA. To be eligible, employers must have a policy that:

  • Covers all qualifying employees
  • Provides at least two weeks of annual paid family and medical leave for each full-time qualifying employee and at least a proportionate amount for each part-time qualifying worker.
  • Provides for payment of at least 50 percent of the qualifying employee’s wages while they’re on leave.
  • Includes language providing “non-interference” protections if the employer employs qualifying employees that aren’t covered by Title I of the FMLA.

The IRS’ guidance is in a question and answer format. For more about what this announcement means for your organization, contact Complete Payroll Solutions at 888-865-4470.

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