Act Soon To Take Advantage of New Business Tax Credit
Your business could qualify for a new tax credit created when the Tax Cuts and Jobs Act was signed into law at the end of 2017. The Employer Credit for Paid Family and Medical Leave (Section 45S of IRS Code) applies to certain employers who offer paid family and medical leave to their employees. It’s only around for this tax year and next (at least for now), so take advantage of it while you can.
Does your business qualify?
There are certain requirements in place for businesses interested in claiming this tax credit, including:
A written policy in place that meets certain requirements including:
- At least 2 weeks paid family and medical leave a year to all qualifying full time employees (prorated for part time employees)
- The paid leave can’t be less than 50% of the wages normally paid to the employee
Which employees qualify?
- Employed for a year or more
- For 2018 credit: employee can’t have made more than $72,000 from the employer
What qualifies for family and medical leave in order to qualify for the tax credit?
- Birth of a child/care for the child
- Adoption or foster care placement
- Care for spouse, child, parent with serious health condition
- Serious health condition making employee unable to perform his/her job
- Family member or employee called to active duty
- Care for a service member who is a spouse, child, a parent, next of kin
Evaluate your company policies regarding the Family Medical Leave Act (FMLA). You still have time to create a company policy regarding family medical leave. You can also change your existing policy or include additional policies to fill in the gaps needed in order to qualify for and take advantage of the tax credit for 2018. The credit will apply retroactively for family/medical leave already taken in 2018 by qualifying employees. The policy just needs to be in place by and have an effective date of December 31, 2018.
We’ve already spoken to some clients about this tax credit, and expect more conversations in the weeks to come. Now’s the time to figure this out with your tax advisor so you’re not up against the deadline and can actually enjoy ringing in the New Year.
Jessica Nunn contributed this blog. Jessica is a manager in the tax department with nearly 10 years of public accounting experience at Gilmore Jasion Mahler, LTD. She specializes in for-profit entities, with a concentration in manufacturing & distribution.
Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.