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July 01, 2020 | Posted in:

Employer Tax Credits and Tax Holiday

The CARES Act comes with some unexpected benefits for small and large businesses alike. This includes tax credits around paid sick leave, paid family leave, and employee retention as well as the deferral of some Social Security taxes.

Families First Coronavirus Response Act (FFCRA)

Small businesses (less than 500 employees) that were required to provide paid sick leave of up to 80 hours for COVID-19 absences can take a fully refundable tax credit to offset the required payments. The same goes for family leave
related to COVID-19.

Employee retention credit

Qualified small businesses that paid qualified wages (up to $10,000 per employee plus health insurance coverage) between March 12, 2020, and before January 1, 2021, can take a 50% credit. The amount depends on the size of the employer and the extent to which operations were impacted because of COVID-19.

Defer federal payroll taxes

Employers can elect to defer 50% of employer Social Security taxes until December 31, 2021, with the remaining 50% paid in 2022. This is for wages paid between March 27 and December 31, 2020.

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