The new Tax Cuts and Jobs Act (TCJA) includes significant changes for individuals and businesses alike, enhancing some tax breaks and eliminating or reducing others. One new provision creates a new tax credit for employers who pay wages for family and medical leaves.
Currently, the new credit has a short shelf life, taking effect in 2018 and only lasting through 2019. However, there's a chance it will be extended by future legislation.
Eligible employers can claim a credit equal to a percentage of wages paid to qualifying employees on leave under the Family and Medical Leave Act (FMLA).
Here's how it works
The IRS has yet to issue official guidance, but here are some of the basics:
Finally, if the employer claims the credit, they can't also deduct the wages as regular business expenses. Usually, the credit will be more valuable to employers than the deduction.
If you have questions about how this credit affects your situation, give us a call.
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The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
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