The CARES Act Provides Significant Tax Relief for Employers
As COVID-19 cases are on the rise, more employees will miss work due to being sick or caring for a family member. The issue will become problematic not only for employees but also employers. Fortunately, the new legislation under the FFCRA (Families First Coronavirus Response Act) and the CARES Act addresses these issues among others. In this article, we summarize four important payroll tax credit mechanisms that can provide valuable tax relief for employers.
1. Employee Retention Credit: A maximum $5,000 per employee refundable payroll tax credit for certain employers that retain employees.
2. Employer Payroll Tax Deferrals: Deferral of an unlimited amount of employer Social Security taxes to the end of 2021 and 2022.
3. Payroll Credit for Required Sick Leave: A refundable payroll tax credit equal to any payments of the new required sick leave.
4. Payroll Credit for Required Family Leave: A refundable payroll tax credit equal to any payment of the new required family leave.