IRS Updates FAQs on ARPA-Related Paid Sick and Family Leave Tax Credits

On July 29, 2021, the IRS updated its FAQs on the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARPA). The updated FAQs now include wages paid for leave taken by workers who accompany individuals to COVID-19 vaccination appointments and those who care for individuals recovering from any COVID-19 vaccine-related illness.

Following are the FAQs updated by the IRS on paid sick and family leave tax credits:

General Information FAQs

  • 8. What are “qualified sick leave wages”?
  • 9. What are “qualified family leave wages”?

Determining the Amount of the Tax Credit for Qualified Sick Leave Wages

  • 25. What is included in “qualified sick leave wages”?
  • 27a. Do “qualified sick leave wages” include wages paid for leave taken to accompany an individual who is obtaining a vaccination or to care for an individual who is recovering from vaccination?
  • 31. What is the rate of pay for qualified sick leave wages if an employee is unable to work because the employee needs to care for others?

Determining the Amount of the Tax Credit for Qualified Family Leave Wages

  • 36. What is included in “qualified family leave wages”?
  • 38. Do qualified family leave wages include wages paid for leave taken for COVID-19 testing, to receive a vaccination or to recover from vaccination?
  • 38a. Do “qualified family leave wages” include wages paid for leave taken to accompany an individual who is obtaining a vaccination or to care for an individual who is recovering from vaccination?

Specific Provisions Related to Self-Employed Individuals

  • 108. How is the “qualified sick leave equivalent amount” for an eligible self-employed individual calculated?

Eligible employers that pay qualified sick and paid family leave wages may receive a tax credit for up to two weeks (80 hours) of paid sick leave at two-thirds the employee’s regular pay rate – up to $200/day or $2,000 total – or a tax credit for up to 12 weeks of paid family leave at two-thirds the employee’s regular pay rate (up to $200/day or $12,000 total).

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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