New IRS commissioner begins work, faces lingering Democratic tax policy questions
Business meals remain deductible at old tax law 50% level

Companies get new tax credit for providing paid family leave

My octogenarian mother does an amazing job of taking care of herself and her little dog, aka my furry younger brother.

My mother and her dog November 2015_Kay Bell photo
My mother and her pup come to our place, like the Thanksgiving visit pictured here, but usually it's me taking time from work to head her way. (Photo by Kay Bell)

But since she no longer drives and hates to impose on friends and neighbors, I make regular trips to her place to help her run errands, take her to doctor appointments and just visit.

It's not too much of a hassle because she lives relatively close and it's usually an easy drive through a lovely section of the Texas Hill Country. Plus, since I work for myself, I can schedule my jobs around my trips to Mum's place.

Not so for millions of others.

Work and family conflicts: When you work for someone else, be it a small firm or a giant corporation, you to tend to be at the mercy of your boss' schedule and leave policies.

Things get even more difficult, for both employers and employees, when the time off is way more than an occasional day or two off to tend to family duties.

Some family friendly companies, however, have opted to make things a bit easier for all involved. They've established paid family and medical leave policies.

And the Tax Cuts and Jobs Act (TCJA) enacted last year has a reward for these businesses. They're eligible for a special tax credit for tax years 2018 and 2019.

Business tax break for worker time off: The exact credit amount is based on a percentage of the wages the business normally paid any qualifying employee who was on family or medical leave for up to 12 weeks per taxable year.

The minimum credit percentage is 12.5 percent and is increased by 0.25 percent for each percentage point by which the amount paid to a qualifying employee exceeds 50 percent of the employee's wages. The maximum available credit is 25 percent of the paid leave wages.

As for which workers' time off counts toward the credit, a qualifying employee for the 2018 tax year generally is one who earned $72,000 or less in 2017. The wage ceiling will be adjusted for inflation for 2018 earnings and the 2019 business credit.

Written policy first: To be eligible for the credit, a business also must first have a written leave policy in place that meets several requirements. The key offerings include:

  • At least two weeks of paid family and medical leave to full-time employees who've been on the job for a year or more.
  • A prorated amount of paid leave for part-time employees.
  • Pay for leave that is at least 50 percent of the wages normally paid to that employee.

The paid leave can be allowed for the birth or adoption of a child; the care of a spouse, child or parent with a serious health condition; a serious health condition that makes the employee unable to work; or a family emergency arising from a spouse, child or parent who is a military service member on active duty.

In addition, eligible employers who set up qualifying paid family leave programs or amend existing programs by Dec. 31 will be eligible to claim the employer credit for worker's eligible paid time off already provided, retroactive to the beginning of the company's 2018 tax year.

More credit info online: The IRS details the new business credit requirements in Notice 2018-17 issued on Sept. 24.

The agency also has a special online page with frequently asked questions (and answers) about the credit, officially known as Section 45S Employer Credit for Paid Family and Medical Leave.

This new tax credit is only available for the 2018 and 2019 tax years … for now; who knows what Congress might do in the future. So if your company is eligible to claim it, be sure to take full advantage of this way for Uncle Sam to say thanks.

I'm adding my personal kudos to companies who have policies that help their workers care for loved ones without worrying unduly about their income and jobs.

As for me, as my own boss I'm giving myself plenty of credit for being such a good daughter! Now it's off to my mom's.

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