The Tax Cuts and Jobs Act (Act) includes a new federal tax credit for employers that provide paid family and medical leave (FML) to their employees.
To be clear, the Act does not require employers to provide paid leave. However, eligible employers are allowed a tax credit based on wages paid to employees on FML. If the employer provides paid leave as vacation leave, personal leave, or medical or sick leave, then that leave will not be considered FML for purposes of the tax credit. The tax credit would apply to employers who have a written policy that provides: · Qualifying full-time employees with at least two weeks of annual paid FML; · Qualifying part-time employees with an annual paid FML amount that is at least proportionate to the full-time employees’ annual paid FML amount; and · A rate of pay not less than 50 percent of the wages normally paid to employees for services performed. The tax credit would apply to an employer’s qualifying employees who are: · Employees as defined under Section 3(e) of the Fair Labor Standards Act of 1938, as amended; · Employed by the employer for one year or more; and · Not compensated in excess of 60 percent of the amount for highly compensated employees for the preceding year (for example, in 2018, employers may only apply the credit toward employees who earn less than $72,000). For employers who meet the above criteria and who pay 50 percent of wages, they may claim a tax credit of 12.5 percent of wages paid for up to 12 weeks of FML annually. For each percentage point increase above 50 percent of wages paid, the employer may increase the tax credit by a 0.25 percentage point (not to exceed 25 percent). The tax credit would apply to wages paid to employees on FML in taxable years beginning after December 31, 2017, and before January 1, 2020. 1/11/2018
|
Recent Insights
Do You Know Where Your Employees Are? Managing Taxes for a Growing Remote Workforce
READ TIME: 5 MINUTES Remote work remains a growing focus of employers with employees increasingly seeking jobs that permit remote or hybrid work arrangements. Though the flexibility and benefits of remote work for employees is highly desired, it comes with some additional considerations and potential tax complications for the employer. State Income Tax Withholding Considerations […]
Read moreGroup Health Plan Guide to COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits due to job loss, reduction in hours, death, divorce, and other life events the right to choose to temporarily continue health benefits provided by their group health plan. This guide includes: Employers required to offer COBRA Plan types […]
Read moreTimely Responses Required for Requests under HIPAA’s Right of Access Rule
READ TIME: 4 MINUTES On December 15, 2023, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR), announced a settlement under the Health Insurance Portability & Accountability Act (HIPAA) Right of Access Rule. This penalty illustrates that the Right of Access Rule remains a focus of HHS and that health […]
Read moreMarch 2024 Compliance Recap
READ TIME: 7 MINUTES ACA reporting is in its first year of the required electronic reporting for employers filing ten or more returns annually. Employers and employees must make changes to HSAs by the April 15 deadline. Employers of all sizes continued to prepare for the June 1 RxDC Reporting using the newly released instructions. […]
Read more