What is the FFCRA credit, and why should you care? Like the ERTC, it’s extra money in your pocket to the extent the credit exceeds your payroll tax liability. Also, like the ERTC, the credit can be claimed on the Form 941 (or an amended Form 941-X).
The FFCRA, signed into law on March 18, 2020, was enacted at the beginning of the pandemic (along with the CARES Act) to ensure that employees directly affected by COVID-19 could take additional sick and family leave. In turn, employers were permitted a credit equal to a percentage of leave wages paid, up to a maximum amount per employee.
Originally, the credit was only available for wages paid from April of 2020 through December of 2020. However, recent legislation extended the credit through September of 2021. The rules are also a little different depending on when the leave was taken.
Here’s a summary of the FFCRA credit provisions, by quarter:
|Q2-Q4 of 2020 and Q1 of 2021||Q2 and Q3 of 2021||Significance|
|Sick Leave||Up to 80 hours of paid sick leave, max credit of $5,110 per employee||80-hour limit reset; additional credit of up to $5,110 available||Total max credit of $10,220 per employee|
|Family Leave||Up to 12 weeks of paid family leave, max credit $10,000 per employee||Max credit increased to $12,000 per employee||Total max credit of $12,000 per employee|
As of January 1, 2021, it is no longer mandatory for employers to offer paid sick and family leave to employees. However, if you choose to do so, you can claim credits as listed above. Moreover, sick leave also includes leave for employees to obtain and recover from a COVID-19 vaccination or to get tested for COVID-19 (and await results).
Notably, you may claim payroll tax credits for both FFCRA leave and for wages paid under the ERTC. This is also true if you have a PPP loan. However, you cannot claim the credits for the same wages (or for wages paid with PPP funds). Therefore, if you have a PPP loan, you will want to allocate as many of the proceeds as possible to non-payroll costs.
For more information on COVID-19 tax relief or other tax planning matters, please visit our blog under Thought Leadership on SingerLewak’s website. For assistance in determining eligibility for the credits, calculating the amount of the credits, and/or claiming the credits, please contact one of the persons listed below.
For questions on this article, please contact Meghan Andersson at [email protected]