Family and Medical Leave Credit
A new federal employer credit for paid family and medical leave is available during the 2018 and 2019 tax years to eligible employers. The new employer credit was added as a new Section of the Internal Revenue Code (Section 45S), as part of the Tax Cuts and Jobs Act of 2017, signed by President Trump on December 22, 2017.

Under Section 45S, an employer is eligible for a tax credit if it voluntarily offers, via a written policy that specifies the leave benefit, at least two weeks and up to twelve weeks paid family and medical leave time annually to qualifying employees. The leave benefit must be at least 50% of normal pay and the credit is 12.5% of the leave benefit. The credit amount increases incrementally (up to a maximum of 25%) to the extent that the leave benefit exceeds 50% of an employee’s normal pay. Additionally, an employer must also provide a prorated amount of paid leave for part-time employees.
Eligible Employee
An eligible employee is one that has been employed by the employer for at least a year and who, for the preceding year, paid no more than 60% of the “highly compensated employee” dollar amount on an annual basis ($72,000 for 2018). Qualifying leave time includes any of the reasons specified in the Family and Medical Leave Act. Amounts paid to an employee which are mandated by the state and local government do not qualify for the credit.

To claim the credit, an employer must complete Form 8994 and attach it to their tax return. In some cases an employer may be eligible to claim the credit retroactively to the beginning of their taxable year. More detail regarding the credit in a question and answer format can be found on the IRS website at...
For more information please contact your trusted advisor at Arnett Carbis Toothman LLP.