The IRS announced today that they have published detailed guidance regarding the new Employer Credit for Paid Family and Medical Leave for tax years 2018 and 2019 enacted by the 2017 Tax Cuts and Jobs Act.
Eligible employers who provide paid family and medical leave to their employees may qualify for the credit. In addition, eligible employers who set up a qualifying paid family leave program or amend an existing program by December 31, 2018 will be eligible to claim the credit retroactive to the beginning of the employer’s 2018 tax year for qualifying leave already provided.
Wages paid by third party payers such as insurance companies also qualify.
An eligible employer is an employer that has a written policy in place that:
- Provides paid family and medical leave for qualifying employees of at least 2 weeks (prorated for part-time employees), at a rate of at least 50% of the employee’s normal wages.
- Leave is paid specifically for one or more FMLA purposes
- Birth of son or daughter of the employee and in order to care for the son or daughter
- Placement of son or daughter with the employee for adoption or foster care
- Caring for the spouse, or a son, daughter, or parent of the employee due to a serious health condition
- A serious health condition that makes the employee unable to perform the functions of the employee’s position
- Qualifying exigency arising from spouse, son, daughter, or parent of the employee who is a member of the Armed Forces
- Caring for a covered service member with a serious injury or illness (spouse, son, daughter, parent, or next of kin of the service member)
- If the employer employs one or more qualifying employees who are not covered by title I of FMLA, the employer’s written policy must include specific “non-interference” language.
- Employed for at least 1 year
- Compensation did not exceed $72,600 in 2017
- For payment of 50% of normal wages, the credit amount is 12.5%
- For payment of greater than 50% of normal wages, the % is increased by 0.25% for each percentage point about 50, up to a maximum of 25%
- Credit can be claimed on payments for up to a maximum of 12 weeks