Employers eligible for tax credits for paid time off for Covid vaccine

Employers can now apply for tax credits for wages paid to employees who help family members who obtain a COVID-19 vaccination.

Credits were made available to employers through the American Rescue Plan Act of 2021 (ARPA) for qualified wages paid to employees who took leave as a result of the coronavirus. According to updated guidance from the IRS, the qualified leave wages credit also applies for an employee who takes leave to accompany a close family member who is obtaining a COVID-19 vaccination or to care for one who is recovering from a vaccination. The rule applies to wages paid for leave taken from April 1, 2021, through September 30, 2021. The credits are claimed on the quarterly 941 payroll tax returns and can immediately reduce the payroll tax deposits that would otherwise be required from your business. These credits are also available for certain self-employed individuals.

Specifically, eligible employers may pay qualified family leave wages to an employee who takes leave to accompany an individual to obtain a COVID-19 immunization or to care for an individual who is recovering from any injury, disability, illness or condition related to the immunization.

For these purposes, an “individual” has the same meaning as under the Families First Coronavirus Response Act of 2020: an immediate family member, someone who regularly resides in the employee’s home, or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for this person.

Eligible wages paid for this credit cannot be the same wages paid for the Employee Retention Tax Credit, but an employee can qualify separately for both credits.  Please also keep in mind that these credits cannot be taken for the same wages that are used for PPP loan forgiveness applications.

Kelley Manders, CPA, is a Senior Manager with our Business & Tax Advisory Group. She can be reached at kmanders@antarescpas.com.