{"id":969,"date":"2019-03-27T15:02:32","date_gmt":"2019-03-27T15:02:32","guid":{"rendered":"https:\/\/www.excelsisaccounting.com\/blog\/?p=969"},"modified":"2019-03-27T15:02:33","modified_gmt":"2019-03-27T15:02:33","slug":"could-your-business-benefit-from-the-tax-credit-for-family-and-medical-leave","status":"publish","type":"post","link":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/2019\/03\/27\/could-your-business-benefit-from-the-tax-credit-for-family-and-medical-leave\/","title":{"rendered":"Could your business benefit from the tax credit for family and medical leave?"},"content":{"rendered":"

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The value of the credit<\/strong><\/p>\n

An eligible employer can claim a credit equal to 12.5% of wages paid to qualifying employees who are on family and medical leave, if the leave payments are at least 50% of the normal wages paid to them. For each 1% increase over 50%, the credit rate increases by 0.25%, up to a maximum credit rate of 25%. <\/p>\n

An eligible employee is one who\u2019s worked for your company for at least one year, with compensation for the preceding year not exceeding 60% of the threshold for highly compensated employees for that year. For 2019, the threshold for highly compensated employees is $125,000 (up from $120,000 for 2018). That means a qualifying employee\u2019s 2019 compensation can\u2019t exceed $72,000 (60% \u00d7 $120,000).<\/p>\n

Employers that claim the family and medical leave credit must reduce their deductions for wages and salaries by the amount of the credit. <\/p>\n

Qualifying leave<\/strong><\/p>\n

For purposes of the credit, family and medical leave is defined as time off taken by a qualified employee for these reasons:<\/p>\n

\u2022 The birth, adoption or fostering of a child (and to care for the child),
\u2022 To care for a spouse, child or parent with a serious health condition,
\u2022 If the employee has a serious health condition,
\u2022 Any qualifying need due to an employee\u2019s spouse, child or parent being on covered active duty in the Armed Forces (or being notified of an impending call or order to covered active duty), and
\u2022 To care for a spouse, child, parent or next of kin who\u2019s a covered veteran or member of the Armed Forces.<\/p>\n

Employer-provided vacation, personal, medical or sick leave (other than leave defined above) isn\u2019t eligible.<\/p>\n

When a policy must be established<\/strong> <\/p>\n

The general rule is that, to claim the credit for your company\u2019s first tax year that begins after December 31, 2017, your written family and medical leave policy must be in place before the paid leave for which the credit will be claimed is taken.<\/p>\n

However, under a favorable transition rule for the first tax year beginning after December 31, 2017, your company\u2019s written leave policy (or an amendment to an existing policy) is considered to be in place as of the effective date of the policy (or amendment) rather than the later adoption date. <\/p>\n

Attractive perk<\/strong><\/p>\n

The new family and medical leave credit could be an attractive perk for your company\u2019s employees. However, it can be expensive because it must be provided to all qualifying full-time employees. Consult with us if you have questions or want more information. <\/p>\n

\u00a9 2019
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