The American Rescue Plan Act of 2021 has provided businesses with various relief efforts. Now, several of these programs are coming to an end September 30, however there is still time for business owners to reap the benefits of the Covid-19 business tax credits before they end.
Qualifying for Covid-19 business tax credit
The Covid-19 business tax credits for small businesses provide businesses with dollar-for-dollar reimbursements that employers can use to provide paid sick leave to employees who cannot work due to Covid-19. These tax credits only cover paid leave between April 1, 2021 and September 30, 2021, but those who have not yet filed can do so before October 31, 2021. To receive the tax credit, employers should file Form 941, the Employer’s Quarterly Federal Tax Return, available on the IRS site. Qualifying businesses that file this form before October 31 will be able to claim credit for the year’s third quarter– July through September.
A blog post by Rocket Lawyer –a free legal information and consulting site– details the various qualifications for applying along with additional information and legal advising about accessing Covid-19 business tax credits.
To qualify for the business tax credits, businesses must have fewer than 500 employees. To use the credit, employees’ absence or inability to work must be for reasons related to Covid-19 between April 1, 2021 and September 30, 2021. These reasons including:
- Leave taken to get the COVID-19 vaccination.
- Leave to recover from any illness or condition related to the vaccination.
- Contracting COVID-19.
- Caring for family members who have contracted COVID-19.
- Quarantine periods related to COVID-19.
- Experiencing COVID-19 symptoms and attempting to get a medical diagnosis or test result.
The credit covers both paid sick leave wages and paid family leave wages up to a certain amount. For paid sick leave wages, the credit covers up to two weeks of leave, up to $511 per day and $5,110 total. For paid family leave wages, the credit covers up to 12 weeks, up to $200 per day and $12,000 total.
Self-employed individuals may also qualify. For additional details and guidelines visit the IRS.gov.
Additional relief resources for small businesses
While the Covid-19 business tax credits may be ending, there are still many resources for small businesses seeking relief. The Small Business Administration provides information for many COVID-19 relief programs such as the Paycheck Protection Program, COVID-19 EIDEL, Restaurant Revitalization Fund, and more.
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