On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA) into law. Below is a brief summary of the tax-related provisions, which are effective April 2, 2020, and expire December 31, 2020.
Paid Sick Leave
Payroll Tax Credits
The paid sick time payroll tax credit can be claimed on a quarterly basis, equal to 100 percent of the amount of sick leave wages paid. The credit is limited to up to $511 per day ($5,110 total) if an employee is taking time off to care for themselves; or up to $200 per day ($2,000 total) if the sick leave is to care for an individual who is quarantined or showing symptoms of COVID-19 or a minor child whose school/daycare is closed. The credit is refundable if it exceeds the amount the employer owes in payroll tax.
For employers who pay family leave wages under the FFCRA, a separate payroll tax provision allows a 100 percent credit against the employer’s share of the payroll tax for each employee, limited to $200 per day, or a total of $10,000 per employee. The credit is refundable if it exceeds the amount the employer owes in payroll tax.
Self-employed workers, including independent contractors also can claim a credit against their regular income taxes related to sick or family leave. The credit covers 100 percent of self-employed individuals’ daily self-employment income or 67 percent if an individual is taking care of a minor child whose school/daycare is closed. The per-day amount is limited to the lesser of $511 per day if for themselves, $200 per day for a minor child or their average daily self-employment income