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.

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