FAQs Address Tax Credit for Paid Family and Medical Leave

In April, the Internal Revenue Service (IRS) released its first round of guidance in the form of Frequently Asked Questions (FAQs) concerning the new federal employer credit for paid family and medical leave under Code Section 45S. The FAQs provide a summary of the credit, particularly on the eligibility rules.

The IRS recognizes that these FAQs do not address all questions related to the written policy requirements, the impact of state and local requirements (for example, New York Paid Family Leave law), and how to treat wages paid by the employer’s insurance provider in the event of employee disability, among others. However, they expect to issue additional guidance in the coming months. In the meantime, employers wishing to take advantage of this credit should review the conditions set forth in Code Section 45S and these FAQs to satisfy the requirements necessary to claim the credit.

For the FAQs, visit https://www.irs.gov/newsroom/section-45s-employer-credit-for-paid-family-and-medical-leave-faqs.

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