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Hey all,

In response to recent updates made by the U.S. government, we will host a free, live webinar on Wednesday, March 25 from 11:30 a.m.-1:00 p.m. EST.

We will cover the Families First Coronavirus Act as well as applying for business loans through the SBA, tax credits and deadlines, and the unemployment process.

We encourage you to register for the free webinar! Click here.

In addition, we assembled a team of our staff that is currently dedicated to working with our clients to better understand changes to the tax law, unemployment claims and understanding requirements of the SBA loan program. Feel free to reach out with any questions and we will point you in the right direction.

The Families First Coronavirus Act expands on the FMLA for emergency family leave and includes sick leave for those affected by COVID-19. Keep in mind there are plenty of circumstances to consider and this will become more clear in the days and weeks going forward.

Sick Leave: Private sector employers and governmental entities with less than 500 workers must now provide employees unable to work or telework with paid sick time under special circumstances related to the coronavirus which are outlined here (taken directly from The National Law Review):

  1. An employee subject to a coronavirus quarantine or isolation order
  2. An employee who has been advised by a health care provider to self-quarantine due to coronavirus concerns
  3. An employee who is experiencing symptoms of coronavirus and is seeking a medical diagnosis
  4. An employee caring for an individual described in 1 or 2 above
  5. An employee caring for a child whose school or place of care is closed, or the child care provider of the child is unavailable, due to coronavirus precautions
  6. An employee who is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services in consultation with the Treasury and Labor Departments

This is available for immediate use regardless of an employee’s tenure with the employer. Full-time employees who are affected by the above, are to receive 80 hours (two weeks) of paid sick leave. Similarly, part-time employees will receive leave equal to their average hours worked in two weeks.

However, the Department of Labor can issue regulations including exempting small businesses with fewer than 50 employees from the paid leave requirements.

Employees on sick leave to care for themselves will be paid the greater of their normal wage or the federal, state, or local minimum wage. Employees who take sick leave for an affected family member will be compensated 2/3 the foregoing rate.

Family Leave: Private sector employers and governmental entities with less than 500 workers must now provide employees up to 12 weeks of FMLA leave for the following:

  • Employees who have worked for the business for at least 30 days
  • Employees who can’t work or telework to care for a minor child, if the child’s school has been closed, or if the child care provider is not available due to an emergency related to the coronavirus

Note: The first 10 days of family leave can be unpaid. After that, employees will receive 2/3 of their normal wages.

All wages paid to employees who apply to the sick leave and family leave in the act will not be subject to the 6.2% Social Security payroll tax. These provisions will take effect no later than 15 days after the act is enacted.

THE BIG QUESTION – Who Pays for this???

Refundable Employer Tax Credits: There is a 100% credit available against the employer’s share of the payroll tax for each employee. Employers will have to increase their gross income for the taxable year by that payroll tax credit received. The sick leave credit is capped as follows per employee:
  • $511 per day and $5,110 in total for employees who fall within scenarios 1-3 above
  • $200 per day and $2,000 in total for employees who fall within scenarios 4-6 above

The family leave credit is capped as follows per employee:
  • capped at $200 per day and $10,000 in total

Example – Sick Leave
$50,000 salaried employee must leave to care for child for 2 weeks. ($50,000 / 260 working days = $192 per day) $192 per day * 10 days = Tax Credit of $1,920

Example – Family Leave

$50,000 salaried employee must leave to care for child for 12 weeks. ($50,000 / 260 working days = $192 per day) $192 per day * 50 days = Tax Credit of $9,600

***NOTICE ANY EMPLOYEE SALARY EXCEEDING $50,000 WILL BE OVER $200 PER DAY LIMIT***

Employers are also given additional payroll tax credits for group health plan costs for, and the 1.45% Medicare payroll tax on wages paid to, workers on coronavirus sick or family leave.

There is a lot of information being thrown at us all but we will continue to monitor this situation and keep you updated.


Tim
 
 
 

Tim Petrey, CPA, CGMA
Managing Partner
HD Davis CPAs,LLC
330.759.8522 ext. 103









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