Employers may claim tax credit for providing paid family and medical leave

The Internal Revenue Service is highlighting National Work and Family Month in October. It was established in 2003 by a Senate resolution. The month of October was chosen to help communicate and celebrate progress toward creating more flexible work environments and helping individuals better balance their work-life commitments.

 The employer credit for paid family and medical leave is a tax benefit that embodies the spirit of National Work and Family Month. Under tax reform, eligible employers who provide paid family and medical leave to their employees in 2019 may qualify for a business credit.

The Family and Medical Leave Act of 1993 required covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons. The law allows certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also protects the employee’s group health benefits during the leave period.

 FMLA is designed to help employees balance their work and family responsibilities by allowing them to take reasonable unpaid leave for specific family and medical reasons.

Qualifying employees

Family and medical leave is a business credit based on a percentage of wages paid to qualifying employees while they’re on family and medical leave.

 To claim the credit, eligible employers must have a written policy in place that satisfies certain requirements, including:

— At least two weeks of paid leave to full-time employees (prorated for part-time employees).

— The paid leave must be at least 50% of the wages normally paid to the employee.

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