Businesses are eligible for tax credits to assist employees in getting vaccinated.

What you’ll discover:

What age groups may now get a COVID-19 vaccine?
Which firms are eligible for the tax credit?
What exactly does the tax credit cover?
Employers must claim the paid sick leave credit on their quarterly tax returns.

Company owners around the nation are excitedly awaiting a return to routine as pandemic-related restrictions begin to diminish and are, in some instances, abolished altogether. In a recent White House statement, President Biden urged companies around the nation to promote and assist employees in getting the vaccine, as well as to provide complete paid time off to those who chose to do so. The President expects that by taking this action, companies will be able to restart pre-pandemic activities. As an incentive, under the American Rescue Plan, some small and medium-sized firms will be allowed to claim paid leave tax credits to offset the expense the company would otherwise face.

What age groups may now get a COVID-19 vaccine?

Currently, three vaccines are available in the United States, all of which have acquired Emergency Use Authorization (EUA) from the United States Food and Drug Administration (FDA). As of the publication date of this article, the Pfizer-BioNTech vaccine is licensed for use with persons aged 16 and up, whereas the Moderna and Janssen (Johnson & Johnson) vaccines are only approved for those aged 18 and above.

All three vaccine makers are now conducting clinical studies on children and adolescents to assess vaccination safety and effectiveness. Dr. Anthony Fauci projected on April 2 that the United States might be able to properly vaccinate children of practically any age by the end of 2021.

Which firms are eligible for the tax credit?

Small and medium-sized businesses will be able to claim refundable tax credits under the American Rescue Plan of 2021 to offset the cost of providing their employees with paid time off to receive COVID-19 vaccinations, as well as paid time off needed for an employee to recover from vaccine side effects if the employee is unable to work or telework while recovering.

The tax credit is available to any firm with less than 500 workers, including tax-exempt organizations. Self-employed enterprises who do not have workers are also eligible for comparable tax breaks.

What exactly does the tax credit cover?

Qualified firms may claim refundable tax credits under the American Rescue Plan for up to 80 hours (ten days) of paid sick leave per employee at the employee’s normal pay rate, up to a maximum of $511 per day ($5,110 total). These credits are offered for workers who use sick time to be vaccinated and recuperate from side effects such as disease, injury, disability, or other condition connected to the vaccination.

Moreover, eligible small and medium-sized firms may be able to claim tax credits for an extra 12 weeks of paid sick leave per employee, up to a total of $12,000, at two-thirds of the employee’s usual pay rate. This paid time off must be related to seeking care for COVID-19 symptoms, being tested for COVID-19, complying with government or medical professionals’ quarantine or isolation restrictions (or to care for someone else who is subject to these restrictions), or caring for a child whose child care provider or school is closed due to the pandemic.

Each of these tax benefits are available for qualifying paid time off spent between April 1, 2021 and September 30, 2021.

Employers must claim the paid sick leave credit on their quarterly tax returns.

If your company qualifies (fewer than 500 workers) and offers paid time off to employees via the American Rescue Plan, you may claim tax credits when completing your quarterly federal employment tax return.

The credit amount is equal to the employee’s portion of Social Security and Medicare taxes on paid sick and family leave earnings, as well as qualifying health plan expenditures, collectively negotiated contributions, and the employee’s share of Social Security and Medicare taxes on those wages. Instead of paying the entire amount of federal employment taxes your firm would normally owe, you may deduct the amount of the tax credit you are entitled for.

If your tax credits exceed your federal employment taxes for the quarter, you may seek an advance payment for the credits using IRS Form 7200, rather than waiting until you complete your year-end tax return for 2021 in early 2022. Self-employed company owners who do not have workers may claim the COVID-19 paid time off credits on their individual 1040 tax return for the year.

Operating a business of any size can be complicated, and it is critical to make employment and benefit choices that are beneficial to your company’s bottom line. These COVID-19 paid time off tax credits are intended to guarantee that company owners may maintain operations without incurring financial losses, while also making it simpler for their employees to acquire the vaccination if they so want.