The IRS Updated the Employer Credit for Paid Family and Medical Leave Tax Form 8994
Published: 02.18.2021
Employers that provided paid family and medical leave during the 2020 tax year, including those that also provided paid leave related to COVID-19, will want to review the updated form 8994 and instructions when preparing their tax returns.To claim the credit, eligible employers must have a written program that pays at least 50% of wages to qualified employees for at least two weeks of annual paid family and medical leave. Eligible employers may claim a general business credit of 12.5% of wages paid for up to 12 weeks of family and medical leave a year, with the credit increasing to as much as 25% if the rate of payment exceeds 50%. The credit was extended several times; most recently extended through 2025.
Form 8994 and its instructions have been updated for the extension. The instructions also note the interaction of this credit with the COVID-19-related tax credit for provision of paid leave, which is currently available for wages paid for certain leaves taken through March 31, 2021. The instructions explain that the same wages cannot be used to figure both credits.
For further details, visit:
- IRS Form 8994 (Rev. January 2021) (irs.gov)
- Instructions for Form 8994 (Rev. January 2021) (irs.gov)
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