Employers Receive Tax Credits To Help Employees Get Vaccinated

As pandemic-related restrictions begin to ease and, in some cases, be lifted entirely, business owners across the country are eagerly anticipating a return to normalcy. In a recent White House announcement, President Biden urged employers across the country to encourage and assist employees in getting the vaccine, as well as to provide full paid time off to those who choose to do so. The President expects that by taking this action, businesses will be able to resume their pre-pandemic operations. As an incentive, under the American Rescue Plan, certain small and mid-sized businesses will be able to claim paid leave tax credits to offset the cost they would otherwise bear.
In the United States, three vaccinations are currently available, all of which have been granted an Emergency Use Authorization (EUA) by the US Food and Drug Administration (FDA). As of the publication of this article, the Pfizer-BioNTech vaccine is approved for use in people aged 16 and up, while the Moderna and Janssen (Johnson & Johnson) vaccines are only for people aged 18 and up. All three vaccine manufacturers are conducting clinical trials on children and adolescents to determine vaccine safety and efficacy. Dr. Anthony Fauci, speaking at an April 2 briefing, predicted that the United States would be able to safely vaccinate children of nearly any age by the end of 2021.
Small and mid-sized businesses will be able to claim refundable tax credits under the American Rescue Plan of 2021 to offset the cost of providing paid time off for COVID-19 vaccinations, as well as paid time off for an employee to recover from vaccine side effects if the employee is unable to work or telework while recovering. The tax credit is available to any business with fewer than 500 employees, including tax-exempt organizations. Similar credits are available to self-employed entrepreneurs who do not have employees.
Under the American Rescue Plan, Eligible businesses may claim refundable tax credits for up to 80 hours (up to ten days) per employee at the employee’s regular pay rate, up to a maximum of $511 per day in paid sick leave ($5,110 per employee in total). These credits are available for sick leave taken by employees to get vaccinated and to recover from side effects, including any illness, injury, disability, or other condition related to the vaccine. Qualified small and mid-size enterprises may also be eligible to claim tax credits for up to an extra 12 weeks of paid sick leave per employee, up to a total of $12,000, at two-thirds of the employee’s usual pay rate. This paid time off must be related to seeking care for COVID-19 symptoms, being tested for COVID-19, adhering to quarantine or isolation restrictions imposed by the government or medical professionals (or caring for someone else who is subject to these restrictions), or caring for a child whose childcare provider or school is closed due to the pandemic. Both tax credits are available for paid time off spent between April 1, 2021 and September 30, 2021.
You can claim tax credits when completing your quarterly federal employment tax return if your business qualifies (fewer than 500 employees) and offers employees paid time off under the American Rescue Plan. The credit is equivalent to the employee’s portion of Social Security and Medicare taxes on those wages, as well as qualified health plan expenses, collectively bargained contributions, and the employee’s portion of those wages’ Social Security and Medicare taxes. Instead of paying the entire amount of federal employment taxes your firm would normally owe, you can deduct the amount of the tax credit you are eligible for. If your tax credits total more than your federal employment taxes for the quarter, you can request an advance payment for the credits using IRS Form 7200 rather than waiting until early 2022 to file your year-end tax return for 2021. When completing their individual 1040 tax return for the year, self-employed business owners without workers can claim the COVID-19 paid time off credits. Running a business of any size is difficult, and it is critical to make decisions about employment and benefits that are beneficial to your company’s bottom line. These COVID-19 paid time off tax credits are intended to help company owners keep their operations running without losing money while also making it easier for their employees to get the vaccine if they desire to.

Child Tax Credit

In mid – July, millions of families across the country will start receiving monthly payments as part of the new, fully refundable child tax credit. The Treasury Department and IRS announced on Monday, the first payment will be made on July 15 and subsequent payment will continue to be made monthly through the end of the year.

About 39 million households will begin receiving the automatic payment. According to the Biden administration, that covers more than 65 million children, accounting for about 88% of all children in the U.S. Families that are eligible will receive up to $300 a month for every child under the age of 6 and up to $250 a month for every child ages 6 to 17.

The American Rescue Plan passed, in March, provide relief for Americans amid the coronavirus pandemic. The legislation is projected to lift more than five million children out of poverty this year, cutting child poverty by more than half, according to The Biden administration.

In 2021, the legislation increased the maximum child tax credit from $2,000 to $3,600 for children under 6 and $3,00 for children 6 and up. It also made the credit fully refundable and turned half of the credit into advanced payments.

The payment by the IRS will be made through direct deposit, paper check, and debit cards. The Treasury Department said the payment will be made on the 15th of each month unless that date falls on a weekend or holiday. Under the American Rescue Plan, individuals making up to $75,000, single-parent head of household filers making up to $112,500 and married couples who file jointly with a combined income up to $150,000 per year are eligible to receive the full amount.

“The American Rescue Plan is delivering critical tax relief to the middle class and hard-pressed working families with children,” President Biden said in a statement. “With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July. While the American Rescue Plan provides for this vital tax relief to hard-working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come. For working families with children, this tax cut sends a clear message: help is here.”

Last month, Biden proposed American Families Plan, which calls for extending the increased child tax credit through 2025 and making it permanently fully refundable. A group of lawmakers is pushing to make the monthly child tax credit payments permanent. According to the nonpartisan Joint Committee on Taxation, it could cost more than $100 billion a year.

Some organizations that work with low-income families have already raised concerns that some of the most vulnerable families now eligible for the payments will not get them without a robust outreach effort. That is because some families who are eligible for the credits are not in the IRS system. After all, they earn too little money to be required to pay taxes.

They were committed to maximizing the use of direct deposit to ensure fast and secure delivery, according to the treasure and the IRS. In the coming months, they will continue outreach efforts to help make sure families are aware of their eligibility.

Some of the lawmakers have raised concerns about the IRS taking on the additional burden of delivering monthly checks to families on top of their tax administration responsibilities. This comes as the IRS has fallen behind on processing millions of income tax returns, potentially delaying refunds for millions of Americans. The new federal income tax filing deadline for individuals is Monday, May 17, having been pushed back by a month. The IRS said the change was to help overburdened Americans, not for internal reasons.

Taxpayers who do not wish to receive advance payments will be able to opt-out. There will also be a portal for taxpayers to update their information such as income and number of qualifying children, though full information on these is not yet available. The IRS has also played a vital role in administering other coronavirus pandemic relief, including helping to deliver three separate rounds of stimulus checks to millions of Americans, over the past year. In the third round this spring, roughly 165 million payments have been delivered since March 12, totaling $388 billion.


The Importance of Tax Planning

A recent study showed that almost a quarter of American taxpayers do not have a financial plan. Financial planning can be hard. It involves so much time and information. Then, once you get that information what does it all mean, or how are you supposed to use it. A recent study shows that 55% of American taxpayers have gotten valuable financial information from their tax return, but only half of that number actually assess their tax returns annually.

Examining your tax return can tell you so much valuable information. It allows you to look at trends from year to year. You can assess income to see if it is non-recurring or reoccurring. You can look at deductions to identify your major expenses. With assessing both of these you can get a good idea of how much money you have left after all of your expenses are covered.

Then from here you can ask more specific questions. For example, how would it affect me if I took more money out of my retirement account, or how would buying this house affect me. You can even assess how having a kid would affect your tax return and financial wellbeing. There is so much you can learn and plan from taxes. Most people think having your taxes done is a once-a-year thing. Tax planning can be super beneficial and not only when it comes to tax time.

So, if it is this beneficial and great why isn’t everyone doing it? Well, that is a simple answer. Tax returns can be very hard to understand. There are so many schedules, depreciation sheets, and just forms in general to look through. That is why talking to a tax professional and tax planning can be so beneficial. Talking to an expert can allow you to benefit from tax breaks and to be able to better plan for the future. Here at SWVA tax and accounting we pride ourselves on our tax planning and want to help every client achieve financial success and peace of mind. Give SWVA Tax & Accounting a call today at (540)-250-3198. We’ll run the numbers, while you run the business.