Local small businesses can continue to receive a new federal tax credit to cover paid sick and family leave for employees through the end of September, Congressman C.A. Dutch Ruppersberger announced.
Thanks to the American Rescue Plan, employers with fewer than 500 employees may receive up to $17,110 per employee to provide workers with up to 10 days of paid sick leave and up to 12 weeks of paid family leave. Workers can also use leave to receive COVID-19 vaccinations and recover from any temporary side effects from their shot.
Research has shown that states where employees gained access to paid sick leave through this tax credit experienced a slow-down in the spread of COVID-19.
Roughly 6 million businesses and more than 30 million workers are eligible for this credit. Businesses can access the advanceable, refundable tax credit in real-time by reducing the amounts they set-aside for payroll taxes and employee withholding, and then claim any excess on their quarterly tax filings or request for an advance payment from the IRS.
Certain self-employed individuals in similar circumstances are entitled to similar credits as are schools, public hospitals and other state and local government employers.
Businesses can find instructions for how to claim the credit at Instructions for Form 7200 (04/2021) | Internal Revenue Service (irs.gov).