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Biden Announces Tax Credit for Small Businesses that Provide PTO for Vaccinations

April 23, 2021

Employers…you could be eligible for a tax credit if you provide full pay for any employee who takes time off to get the COVID-19 vaccine. We have the details here.

Attention employers…if you provide paid time off (PTO) to employees who take time off to get vaccinated, you could qualify for a tax credit. How do you qualify? Find out below.

What organizations qualify for the credit?

Businesses and nonprofits with fewer than 500 employees are eligible.

What does the credit cover?

The credit provides full pay to employees who take time off to get the COVID-19 vaccine. It also provides full pay for employees to take time to recover from adverse side effects of the vaccine.

Funded by the American Rescue Plan, the credit covers up to $511 per day for each vaccinated employee, for up to 10 work days (or 80 work hours) taken between April 1 and September 30, 2021.

What is the purpose of the credit?

Through the credit, President Biden hopes to encourage more individuals to obtain vaccinations.

How do you claim the credit?

Employers are required to report their total paid sick and family leave wages for each quarter on their federal employment tax return (typically Form 941). As the IRS explains, eligible employers can keep the federal employment taxes that they otherwise would have deposited (including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes and the eligible employer’s share of social security and Medicare taxes) with respect to all employees up to the amount of credit for which they are eligible.

Employers who don’t have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages may seek a refund by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Self-employed taxpayers can claim the credit on their individual 1040s.

Note: if an entity utilizes a payroll company to administer their payroll, then the employer needs to coordinate with their payroll company to claim the credit—it’s not automatically claimed.

Questions about the credit and your eligibility? We can help.

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