Employee benefits are often beneficial for both the companies that provide them and employees who receive them. When one of those benefits is paid medical or family leave, the loved ones of employees benefit, too – often at a crucial time in their lives. If you’re an employer who wants to offer benefits that really matter, consider the following.
Companies qualify for a tax credit when they meet certain conditions providing paid family and medical leave. According to the IRS, employers may claim the credit when they have a written policy that offers at least two weeks of paid family and medical leave annually to all qualifying employees who work full time. This can be prorated for employees who work part time.
Paid leave must provide at least 50% of the wages normally paid to the employee. In return, employers who offer the paid leave receive a credit based on a percentage of the amount of wages paid to a qualifying employee on leave for up to 12 weeks annually.
Employers should be aware of two caveats when offering the paid leave for tax credit. One is that the qualifying employer must reduce its deduction for wages or salaries paid by the amount of credit. The second catch is that the tax credit expires on wages paid starting in 2020.
Qualified events include:
- The birth and care of a newborn.
- Adoption or foster care.
- Caring for a spouse, child or parent with a serious health condition.
- Certain events involving family members on active duty in the Armed Forces.