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Coronavirus COVID-19 Paid Sick and Family Leave Update

Key Takeaways for Coronavirus Relief

To help businesses and employees deal with the impact of the coronavirus COVID-19, Congress made available a range of sick and family leave benefits in legislation called the Family First Coronavirus Response Act (FFCRA). For businesses to take immediate advantage of the paid leave credits now available to them, they can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released this week. Please speak with you Fiducial advisor if you would like to make this claim.

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Paid Sick Leave for Workers

For COVID-19 related reasons, employees can receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.

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Complete Coverage

Employers can receive 100% reimbursement tax credit for paid leave

o Health insurance costs are also included in the credito Employers face no payroll tax liabilityo Self-employed individuals receive an equivalent credit

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Fast and Easy Funds

Reimbursement is quick and easy to obtain

o An immediate dollar-for-dollar tax offset against payroll taxes will be providedo Where a refund is owed, the IRS will send the refund as quickly as possibleo A 30-day non-enforcement period for good faith compliance efforts is in effect

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Small Business Protection

Employers with fewer than 50 employees are eligible for an exemption from therequirements to provide leave to care for a child whose school is closed, or child care isunavailable in cases where the viability of the business is threatened. Just ask your Fiducial advisor


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Emergency Relief Services

● Cash Flow Analysis● C Corp, S Corps and Partnership Budgeting● Tax Planning● Tax Extension Preparation● Tax Appeals and Tax Resolution● State and Local Tax Relief● Special Deductions and Credits● Sales and Use Tax Relief● SBA Loan Consulting

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More Details on Coronavirus Leave Relief

Employees can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay where the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis. An employee can also receive two weeks (up to 80 hours) of paid sick leave at 2/3 the employee’s pay who is unable to work and needs to care for:o an individual subject to quarantine, o a child whose school is closed or whose child care provider is unavailable for reasons related to COVID-19, and/or o themselves if they are experiencing substantially similar conditions as specified by the U.S. Department of Health and Human Services
An employee who is unable to work due to a need to care for a child whose school is closed, or child care provider is unavailable for reasons related to COVID-19, may in some instances receive up to an additional 10 weeks of expanded paid family and medical leave at 2/3 the employee’s pay.
When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees' share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.
Under guidance that will be released this week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.
The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced this week.

  • Sick Leave for Self and Family

For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at 100% the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
For an employee who is caring for someone with Coronavirus, or is caring for a child because the child’s school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Who is Covered?

    Employers with less than 500 employees 
    All employees, regardless of length of employment

When can this be used?

    (1) If an employee is subject to federal, state or local quarantine or isolation order
    (2) If an employee is advised by health care provider to self-quarantine
    (3) For seeking medical diagnosis for symptoms of COVID-19
    (4) To care for a quarantined or isolated individual (2/3 pay)
    (5) To care for child if school or daycare is closed (2/3 pay)
    (6) For a substantially similar condition even if not COVID-19 (2/3 pay)
    Credits can be claimed starting April 2nd and end on December 31, 2020

What will be paid?

    Covered employers may get a credit against employer Social Security tax liability equal to 100% of the qualified sick leave wages paid by the employer, increased by health expenses like health premiums, subject to these limitations
    Full time employees get 80 hours (2/3 pay if for uses 4, 5 or 6)
    Part-time employees are pro-rated
    Limited to $511/day and $5,110 total for uses 1, 2 and 3
    Limited to $200/day and $2,000 total for uses 4, 5 and 6

Note

    Employers are prohibited from requiring an employee to use other paid leave provided by the employer prior to using paid sick leave required by the new law. Employers are also prohibited from requiring workers to find a replacement to cover their hours during their time off.
    Employers must post a notice describing these requirements when such notice is provided by the Department of Labor, which should be available by March 25, 2020. Once the Department of Labor publishes the notice, it will be available for download from the State & Federal Resources Section of HR411.
  • Child Care Leave

In addition to the sick leave credit described above, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Who is Covered?

    Employers with less than 500 employees 
    Exception available for employers with less than 50 employees
    All employees, regardless of length of employment

When Can This Be Used?

    In addition to coronavirus sick leave
    Care of a child under 18 if their school or daycare is closed because of the emergency
    Can use up to 12 weeks of protected leave
    2 weeks only if worked less than 30 days
    Credits can be claimed starting April 2nd and end on December 31, 2020

What will be paid?

    No pay for first 10 days (employee may use other leave, including the new emergency sick leave, but this cannot be forced)
    After 10 days, pay 2/3 of regular rate of pay for the number of hours they would normally work up to $200/day $10,000 total over 10 week period
    When combined with the new 10 day (80 hour) sick leave provision, the total amount allowed at $200/day is $12,000 total over a 12 week period

Are there still job guarantees?

    Job guarantee required except for employers with less than 25 employees if:o Job no longer exists because of changes affecting employment caused by public health emergency; ANDo Reasonable efforts to find equivalent positions were made (and failed). Employees would have to be contacted if anything comes up within a year.
  • Self Employed Individuals

Self-employed individuals, including gig workers, are eligible for tax credits similar to above. Ifindividuals are unable to perform services in their trade or business for the sick leave purposes describedabove, the individual may qualify for an income tax credit equal to 100% of average daily self-employment income. Like the employer credits, this credit is limited to $511 per day for certain qualifying sick leave purposes, and $200 for other sick and qualified family leave purposes. The sick leave credit is limited to a maximum of 10 days. The family leave credit is limited to 50 days.
For self-employed individuals, the income tax credit is refundable (meaning that if the tax credit amount exceeds the individual’s income tax liability, the excess is received as a refund, or payment, from the Treasury).

Who is Covered?

    Employers with less than 500 employees (ask us about relief available for employers with less than 50 employees)
    All employees, regardless of length of employment

When Can This Be Used?

    In addition to coronavirus sick leave
    Care of a child under 18 if their school or daycare is closed because of the emergency
    Credits can be claimed starting April 2nd and end on December 31, 2020

What will be paid?

    No pay for first 10 days (employee may use other leave, including the new emergency sick leave, but this cannot be forced)
    After 10 days, pay 2/3 of regular rate of pay for the number of hours they would normally work up to $200/day ($10,000 total)
    Limited to $200/day and $2,000 total for uses 4, 5 and 6

Are there still job guarantees?

    Required except for employers with less than 25 employees if:o Job no longer exists because of changes affecting employment caused by public health emergency; ANDo Reasonable efforts to find equivalent positions were made (and failed). Employees would have to be contacted if anything comes up within a year.
  • Small Business Exemption

Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer’s business as a going concern.

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