Payroll tax credits for vaccines: IRS issues new guidance
Under the American Rescue Plan Act, employers with 500 or fewer employees can receive payroll tax credits for paid time off they give their people to either get the COVID-19 vaccine or recover from it.
Now IRS has clarified how you can take advantage. It just issued a new fact sheet to help employers understand the logistics of these new credits.
Here’s what you need to know.
Claiming the tax credits for vaccines
You can claim the credits for wages paid during the period from April 1, 2021, through Sept. 30, 2021, if you pay sick and family leave during that time.
And if you expect to claim the payroll tax credits on your Form 941, here’s how to do it. You can simply keep the federal employment taxes you otherwise would’ve deposited equal to the amount of the credit. That includes:
- federal income tax withheld from employees
- employees’ share of social security and Medicare taxes, and
- your company’s share of social security and Medicare taxes.
Should you not have enough federal employment taxes on deposit to cover the amount of your anticipated credits, you can request an advance by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.
- Share on
Free Training & Resources
White Papers
Provided by UJET
White Papers
Provided by Anaplan
Further Reading
With tax year 2024 Forms W-2 out the door, it’s time to turn your attention toward the changes IRS has made for TY 2025 forms. The IRS...
High inflation continues to impact businesses. One of the latest examples? Costlier penalties for breaking workplace laws. Several federal ...
For employees on reduced schedule FMLA leave, 12 workweeks will get converted into days, hours or minutes. But that can trip up employers, ...
IRS has given employers two extra years to implement a Secure 2.0 Act provision that’s bringing tax changes for certain retirement pl...
Time to update your systems: SSA has announced the 2026 Social Security taxable wage base. Next year’s number will increase to $184,50...
A proposed change to overtime eligibility by the Department of Labor is causing a fair share of angst for many employers. Companies in the ...
