Kelly J. Bullis: New family leave credit for businesses
As an employer, don’t you just grind your teeth when an employee calls in sick and you suspect that they are just out skiing or doing something fun while using being sick as an excuse to get out of work? Are you one of those many generous employers who actually pays “sick leave,” even to the “hooky-from-work” folks?
Well, in the last Trump tax law, there was a hidden provision that you’re going to love. It’s a new tax credit for employers who give employees time off for family and medical leave. (Now at least you might even get a credit for paying sick leave to an employee who is just playing hooky from work, as long as you only suspect the hooky and can’t prove it.)
Here are the specifics to be able to take this credit:
1) You must have a written plan that has been distributed to all employees stating the “rules” that you offer (i.e. pay, number of days off per year, types of events, etc.);
2) Your “plan” must offer at least two weeks of paid leave annually;
3) Qualified workers must earn less than $72,000 a year;
4) Qualified workers must have been employed by you for at least one year;
5) Payment for leave must be at least 50 percent of regular pay;
6) Credit starts at 12.5 percent of actual leave paid for 50 percent of regular pay and goes up to a maximum of 25 percent credit for 100 percent of regular pay;
7) Maximum time leave pay qualifies is 12 weeks.
Kinds of events that qualify for the credit on payment of family and medical leave are:
1) Birth of the employee’s child and the care of such child;
2) Placement of a child with the employee for adoption or foster care;
3) Care for the employee’s spouse, child, or parent who has a serious health condition;
4) The employee’s serious health condition that makes them unable to perform the functions of their position (if they are dealing with the debilitating symptoms of a flu virus, they obviously are unable to perform their job);
5) Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty in the armed forces.
Please note, as of this date, this credit is only available for 2018 and 2019. Hopefully, Congress will extend it (like they’ve done in other cases in the past), but there is no guarantee.
You should be having your bookkeeper keep track of all the qualified family and medical leave that you paid. At the end of the year, tell your tax preparer that amount.
Hey! If you were already a generous employer, this is found money! If you’ve been on the fence about starting a family and medical leave pay arrangement, maybe this credit is enough to get you started.
Did you hear? Psalms 94:19 says, “When the cares of my heart are many, your consolations cheer my soul.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. He’s also on the web at BullisAndCo.com and on Facebook.