Let Your Employees Get the Jab (COVID-19 Vaccination) — You May Get a Tax Credit

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If you are an employer with under 500 employees, you may be eligible for a tax credit for paid leave provided to your employees to receive the COVID-19 vaccination or for paid leave they take to recover from any illness or condition as a result of receiving the vaccine. The Biden administration recently announced this benefit that is available under the American Rescue Plan Act of 2021. The tax credits become available for wages paid from April 1, 2021, through September 30, 2021.

How Much Can We Get?

The credits are applied against an employer’s share of the Medicare tax. The tax credit can be equal to paid sick leave wages up to two weeks (80 hours). The credit is limited to $511 per day and an overall total of $5,110. If the employee is taking paid FMLA leave, the credit is limited to $200 per day and $12,000 in the aggregate.

How Do We Report It?

The cost of the paid wages for vaccinations or recovery from vaccinations should be reported quarterly. The most likely place to report it would be on Form 941.  If there are any questions on reporting, please refer to the IRS website or consult with an accountant or tax professional.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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