The Internal Revenue Service (IRS) has updated a number of FAQs on the tax credit for COVID-19 sick and family leave, reflecting changes made by the Consolidated Appropriations Act, 2021. The year-end law extended the credit for employers that voluntarily continue to provide leave past the mandatory requirement that expired at the end of 2020. The credit, which was first enacted under the Families First Coronavirus Response Act (FFCRA), is now available until March 31, 2021.

The updated IRS FAQs fall under the following 14 broad subject areas. Each of the following FAQs on these topics (except the fifth) have been updated:

1. General Information
2. What is an Eligible Employer?
3. Determining the Amount of the Tax Credit for Qualified Sick Leave Wages
4. Determining the Amount of the Tax Credit for Qualified Family Leave Wages
5. Determining the Amount of Allocable Qualified Health Plan Expenses
6. How to Claim the Credits
7. How Should an Employer Substantiate Eligibility for Tax Credits for Qualified Leave Wages?
8. Periods of Time for Which Credits are Available
9. Special Issues for Employers: Taxation and Deductibility of Tax Credits
10. Special Issues for Employers: Interaction of the FFCRA Tax Credits with Other Tax Credits
11. Special Issues for Employers: Use of Third-Party Payers
12. Special Issues for Employers: Other Issues
13. Special Issues for Employees
14. Specific Provisions Related to Self-Employed Individuals

Resources

• IRS announcement on the updated FAQs
• Congressional Research Service report on COVID-19 paid leave credits
• Department of Labor's FAQs on COVID-19 paid leave

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