What Small Business Owners Need to Know About the Families First Coronavirus Relief Bill
Small employers and self-employed individuals are given new tax credits and federal payroll-tax relief to pay for the new mandatory benefits.
WASHINGTON, D.C. — On March 18, President Trump signed into law the Families First Coronavirus Response Act, a broad response to many of the challenges caused by the spread of the coronavirus disease, COVID-19.
U.S. businesses with fewer than 500 employees can use the funds granted by the Act to provide employees with paid leave, either for the employee’s own healthcare needs or to care for their family members.
Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date — the beginning date will be within 15 days of the March 18 date the Act became law — and Dec. 31.
Equivalent credits are available to self-employed individuals based on similar circumstances.
For coronavirus-related reasons, employees will be able to receive up to 80 hours of paid sick leave and expanded paid childcare leave when employees’ children’s schools are closed or child care providers are unavailable. Health insurance costs are included in the credit. Employers won’t face any payroll tax liability. Employers will receive 100% reimbursement for paid leave.
To take advantage of the paid leave credits, businesses can keep and access funds they would otherwise pay to the IRS in payroll taxes. If those amounts aren’t enough to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
For an employee who’s unable to work because of coronavirus quarantine or self-quarantine or has coronavirus symptoms and is seeking a medical diagnosis, eligible employers can receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
For an employee who’s caring for someone with coronavirus, or is caring for a child because the child’s school or childcare facility is closed, or the childcare provider is unavailable due to coronavirus, eligible employers can claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days.
Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Along with the sick leave credit, for an employee who is unable to work because of a need to care for a child, eligible employers can receive a refundable childcare leave credit. The credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate.
Up to 10 weeks of qualifying leave can be counted toward the childcare leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
The Security Industry Association (SIA) surveyed the law and has provided a summary of key provisions that will impact the business operations of SIA members, including tax credits for employers, employee paid leave and unemployment insurance.
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