3/23/20 - Payroll Tax Credits & Paid Sick Leave for Workers

Please see below updates and clarification on tax laws that have recently been passed on the morning of March 21, 2020.

To Summarize:

Small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately fully or partially reimburse them for the cost of providing Coronavirus-related paid leave to their employees.

Details of the Payroll Tax Credits: Eligible employers are businesses with fewer than 500 employees that are required to provide paid leave to employees. They can receive benefits to be able to provide these funds to employees for the paid leave, which can either be for the employee's own health needs, or to care for family members.

The legislation enables employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.

Paid Sick Leave for Workers For COVID-19 related reasons, employees may be eligible to receive 2 weeks' pay of up to 80 hours of paid sick leave at 100% of salary, if the employee is ill and unable to work. Employers will receive a payroll tax credit at the employee's regular rate of pay up to $511 per day for 10 days, or a total of $5,110.

If an employee is unable to work due to the employee's children's schools being closed or child care providers being unavailable, the employee may be eligible to receive 2 weeks' pay of up to 80 hours at 2/3 of salary. Employers will receive a payroll tax credit at the employee's regular rate of pay up to $200 per day for 10 days, or a total of $2,000. An additional 10 weeks may also be available to care for the employee's child at 2/3 of salary.

Complete Coverage

  • Employers can receive the following additional benefits:

  • ​Reimbursement of health insurance costs for covering employee

  • No employer payroll tax liabilities

  • ​Self-employed individuals will receive equivalent credit


Funds Availability

  • Immediate dollar-for-dollar offset against payroll taxes due

  • Quick process of refunds due to employers as a result of the credits exceeding payroll taxes due

Small Business Protection

  • Employers with less than 50 employees are exempt from providing leave for care for a child whose school is closed, or where child care is unavailable, if the business is financially unable to provide these benefits.

How Does It Work

  • Employers pay employees as usual

  • Eligible credits reduce the payroll taxes required to be deposited

  • If no payroll taxes are due and a refund is due to the employer, a refund claim is filed which will be paid within 2 weeks

New York State: Governor Cuomo has said that New York State will match the filing and payment extensions granted by the Internal Revenue Service. These details will be conveyed as soon as they are available.

Your professionals at Castellano Korenberg & Co. are always available to assist you through this tough time of trying to make sense of all the new regulations being passed. Stay up to date with the most recent information by visiting our website or contact your CK professional for more information.

#covid19 #payrolltax #FMLA

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