FMLA: Federal Tax Credit

As part of the 2017 Tax Cuts and Jobs Act, employers may claim a general business tax credit on wages paid to qualifying employees who are on family and medical leave.

To have access to the credit, employers must have in place a written policy that “provides at least two weeks of paid family and medical leave on an annual basis to all qualifying employees who work full time and which is prorated for employees who work part time”.

Ervin Cohen & Jessup LLP outlines that a “qualifying employee” is “any employee who has been employed by the employer for one year or more and who, for the preceding year, had compensation of not more than a certain amount, which is currently $72,000”.

Paid Family and Medical Leave may be taken for the following reasons:

  1. Birth of an employee’s child and to care for the child;
  2. Placement of a child with the employee for adoption or foster care;
  3. To care for the employee’s spouse, child, or parent who has a serious health condition;
  4. A serious health condition that makes the employee unable to perform the functions of his or her position;
  5. Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty (or having been notified of an impending call or order to covered active duty) in the Armed Forces; and
  6. To care for a service member who is the employee’s spouse, child, parent, or next of kin.

For more information how the tax credit is calculated and the time period for which the credit is available, please click here.

The information included in this blog post originally appeared in an article in Ervin Cohen & Jessup LLP’s blog on September 24, 2018, written by Kelly O. Scott.

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