Vaccine hesitancy in the U.S., coupled with the Delta variant and ever-growing complacency about the virus, has led to a troublesome rise in COVID-19 cases of late. As of writing (mid-July 2021), The New York Times is reporting that cases in the last 14 days are up nearly 200%, while deaths have increased almost 44%. America’s once torrid vaccination pace has slowed to a trickle, and the consequences have been deadly.

For their part, businesses can play a role in turning the Delta tide by encouraging their employees to get vaccinated and helping them stay healthy and safe. Here’s an overview of the tax credit.

What Is It?

The employer tax credit is a fiscal incentive aimed at boosting vaccination rates across the U.S. by helping employers provide paid time off to employees. The credit allows employers to claim refundable tax credits to recoup wages paid to employees who take time off to get the vaccine or recover from any after-effects or need to care for someone in quarantine or provide care to children if their school or daycare shuts down. The measure is part of the American Rescue Plan Act of 2021 and is available to employees who take time off between April 1, 2021, and September 30, 2021.

Who Is Eligible?

The eligibility criteria broad and include businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers. It’s worth noting that self-employed individuals qualify for similar tax credits. The program applies to nearly half of America’s private-sector employees.

How Much Can I Claim?

The tax credit covers up to $511 per day and a maximum of $5,110 for ten work days, or 80 work hours. There is also a tax credit for paid family leave for employees who cannot work because they have to care for a child whose school or daycare has been closed due to a public health emergency. Here are the details of those credits:

• Family leave wages paid for a maximum of 12 weeks
• Maximum of $200 per day and $12,000 in total
• Capped at two thirds of the employee’s regular wages

How Do I Claim the Credit?

To claim the tax credit, employers should use Form 941, Employer’s Quarterly Federal Tax Return. If you’re self-employed, use Form 1040, U.S. Individual Income Tax Return.

If you’re an employer, you’re likely familiar with Form 941, so the process should be straightforward.

A couple of things worth noting:

• Eligible employers can keep the federal employment taxes that they otherwise would have deposited
• Employers who don’t have enough federal employment taxes to cover paid sick leave and family leave can request an advance of the credits using Form 7200, Advance Payment of Employer Credits Due to COVID-19

The Last Word

The tax credit for small- and medium-sized businesses is a generous fiscal incentive that employers can add to their arsenal to help the fight against COVID-19.

As with any tax-related matters, if you have any questions or require clarification, you should talk to a tax professional for expert advice.

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