9.25.18 – Mitch Reitman, Managing Principal at Reitman Consulting Group
Employers that provide paid family and medical leave to employees may qualify for a new credit for tax years 2018 and 2019, the IRS announced.
In addition, eligible employers who set up qualifying paid family leave programs or amend existing programs by Dec. 31 can claim the credit for paid family and medical leave, retroactive to the beginning of the employer’s 2018 tax year, for qualifying leave already provided.
Notice 2018-71 details guidance on the credit, which was enacted by the Tax Cuts and Jobs Act. The notice clarifies how to calculate the credit, including application of rules and limitations.
Generally, for tax year 2018 the employee’s 2017 compensation from the employer must have been $72,000 or less. Among other conditions:
- The policy must provide at least two weeks of annual paid family and medical leave for each full-time qualifying employee and at least a proportionate amount of leave for each part-time qualifying employee.
- The policy must provide for payment of at least 50 percent of the qualifying employee’s wages while the employee is on leave.
- Any leave paid by a state or local government or required by state or local law is not taken into account for any purpose in determining the amount of paid family and medical leave provided by the employer.
Mitch Reitman is the Managing Principal at Reitman Consulting Group, Inc. and can be reached at 817-698-9999