TAX TIPS (and other stuff)
By Kelly J. Bullis, CPA
2018-August 4th
Are you currently offering “sick leave” to your employees? You may be able to take a tax credit for that again. Originally in the TCJA, this credit was only available on 2017 and 2018 tax returns. In the OBBBA, the credit is back and it’s permanent.
In the One Big Beautiful Bill Act (OBBBA), the original law from the 2017 Tax Cuts Jobs Act (TCJA) has some new provisions that you’re gonna love. In the TCJA, a “Family Leave” credit was originally for employers who give employees time off for Family and Medical Leave.
Here are the updated 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 2 weeks of paid leave annually; 3) Qualified workers must earn less than $96,000 in 2025; 4) Qualified workers must have been employed by you for at least 6 months; 5) Payment for leave must be at least 50% of regular pay; 6) Credit starts at 12.5% of actual leave paid for 50% of regular pay and goes up to a maximum of 25% credit for 100% of regular pay; 7) Maximum time leave pay qualifies is 12 weeks; 8) An option is now available for the employer to elect to use the cost of medical insurance premiums paid or incurred instead of sick leave paid…for this option, there is no requirement to offer a paid leave program.
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 bad cold, 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.
You should be having your bookkeeper keep track of all the qualified Family and Medical Leave that you paid or for the medical insurance option, to keep track of medical insurance premiums 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. On the web at BullisAndCo.com Also on Facebook.
