New IRS Guidance on Paid Leave Tax Credit

The IRS issued guidance on the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARP). The updates clarify that eligible employers can claim the credits for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the immunization.

IRS tax guidanceUnder the ARP, eligible employers and self-employed individuals, including businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, may claim tax credits for qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits).

New FAQs include information on how eligible employers may claim the paid sick and family leave credits, file for and compute the applicable credit amounts, and receive advance payments for and refunds of the credits.

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