COVID-19 Related Tax Credits for Employers and Self Employed

For those business owners and self-employed individuals currently experiencing an adverse business environment due to COVID-19. The IRS in conjunction with Congress have a couple payroll tax credits to help with your quarterly or annual tax liabilities.

  • Employee Retention Credit:

Eligible employers can claim the employee retention credit, a refundable tax credit equal to 50 percent of up to $10,000 in qualified wages (including health plan expenses), paid after March 12, 2020 and before January 1, 2021.  Eligible employers are those businesses with operations that have been partially or fully suspended due to governmental orders due to COVID-19, or businesses that have a significant decline in gross receipts compared to 2019. Self-employed or businesses that have accepted any PPP loan proceeds from the SBA don’t qualify.

  • Credit for Sick and Family Leave:

For business owners who are dealing with an employee, who was diagnosed with COVID-19. The employee had to stay home due to a sick child or ordered to stay home due to medical advice by a professional. As a business owner you are obligated to pay that employee for the time missed (up to 10 days or 80 hours). You are reimbursed for those days/hours paid to your employee through the Qualified Sick and Family Leave payroll credit.

  • Credit for Self-Employed Individuals:

An eligible self-employed would be entitled to receive qualified sick leave and qualified family leave wages. You qualify if you were subject to a federal, state or local quarantine due to COVID-19. You have been advised by a health care professional to self-quarantine due to COVID-19. You experience symptoms of COVID-19.  If you qualify under any of the three situations listed above you then qualify for the qualified sick leave and family leave wage credit that goes right against your Self Employment Taxes.

For clarification or advice on any of the payroll tax credits discussed above you can certainly give us a call at 631-547-1040 or shoot us an email. Thank you