What is FFCRA?

The FFCRA, signed by President Trump on March 18, 2020, provides small and midsize businesses with refundable tax credits that reimburse them for providing paid sick and expanded family & medical leave to eligible employees for COVID-19 related reasons from April 1, 2020, through December 31, 2020. There are two provisions under this Act:

 

1. The Emergency Paid Sick Leave Act (EPSLA)

2. The Emergency Family and Medical Leave Expansion Act (EFMLEA)

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The Emergency Paid Sick Leave Act 

The EPSLA offers paid sick leave to eligible employees for two weeks (up to 80 hours). An eligible employee is someone who is out of work (or telework) due to following reasons:

1. The employee who is under quarantine/self-quarantine, having COVID-19 symptoms and seeking medical diagnosis.

2. The employee who is taking care of a child whose school is closed or child care is unavailable for COVID-19 precautions. 

 

The employee who is out of work (or telework) due to reason (1) above is entitled to 80 hours of paid sick leave at 100% of employee regular pay or Federal minimum or State/Local minimum, up to $511 a day and $5110 in the aggregate.

The employee who is out of work (or telework) due to reason (2) above is entitled to 80 hours of paid sick leave at ⅔ of employee regular pay or Federal minimum or State/Local minimum, up to $200 a day and $2000 in the aggregate.
 

The Emergency Family and Medical Leave Expansion Act

The EFMLEA provides 10 weeks of qualifying leave to an employee who is unable to work (or telework) because the employee is taking care of a child whose child provider is unavailable due to COVID-19 precautions. An eligible employee is entitled to family and medical leave at ⅔ of employee regular pay or up to $200 a day and $10000 in the aggregate. 

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What employers are eligible to claim these credits?

Small businesses and tax-exempt organizations that have less than 500 employees and are required to pay paid sick leave or expanded family and medical leave to their employees. For more information, see What is an eligible employer? on the IRS website. 
 

How do eligible employers claim FFCRA credits?

To claim FFCRA credits, employers should report total qualified leave wages for each quarter on Form 941, Employer’s Quarterly Federal Tax Return. Eligible employers can retain federal employment taxes including federal income tax and employee and employer share of social security and medicare taxes that they otherwise would have deposited to the IRS. 

 

Are there any exemptions from FFCRA?

Small businesses with fewer than 50 employees may be eligible to claim an exemption from the requirement of providing paid sick leave and expanded family and medical leave to the employees who are caring for a child whose school is closed or child care is unavailable due to COVID-19 precautions. For more information, see the Department of Labor Families First Coronavirus Response Act: Questions and Answers.

 

Are Self-employed individuals eligible for FFCRA credits? 

Yes, Self-employed individuals having any trade or business are also eligible for FFCRA credits under expanded FMLEA. FFCRA credit is an offset from the self-employment taxes, including Social Security and Medicare taxes. 

Self-employed individual is eligible for FFCRA credit if he is out of work (or telework) due to government quarantine orders, self-quarantine, COVID-19 symptoms and seeking medical diagnosis. The credit is calculated by multiplying the number of days on leave by smaller of 

• Your average daily self-employment income of year or; 

• $511. 

If you are unable to work (or telework) to take care of a family member who is under quarantine or to take care of a child whose child care is unavailable, you are still eligible for this credit. The credit in this case is calculated by multiplying the number of days on leave by the smaller of 

•  ⅔ of your average daily self-employment income or;

• $200.

 

For more information on these credits, reach out to us at info@mushlock.com

 

Sources: 

1. https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs-0

2. https://www.irs.gov/newsroom/covid-19-related-tax-credits-basic-faqs#what-employers-may-claim-tax-credits

3. https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave