SECTION 455 FOR FAMILY AND MEDICAL LEAVE
October 22, 2019 - Douglas Myser
Section 455 for family and medical leave. Internal Revenue. Code Section 455 provides a tax credit for employers who provide paid family and medical leave to their employees. Eligible employers may claim the credit, which is equal to a percentage of wages they pay to qualifying employees while they're on family and medical leave. The credit generally is effective for wages paid in taxable years of the employer beginning after December 31, 2017, and it isn't available for wages paid in taxable years of the employer beginning after December 31, 2019. IRS notice 2018-71 has more information. Section 455 for family and medical leave.
What is the employer credit for paid family and medical leave ? Answer. This is a general business credit employers may claim, based on wages paid to qualifying employees while they are on family and medical leave, subject to certain conditions. Who may claim the employer credit for paid family and medical leave ? Answer. Employers must have a written policy in place that meets certain requirements, including providing, 1. At least two weeks of paid family and medical leave (annually) to all qualifying employees who work full time (prorated for employees who work part time), and 2. The paid leave is not less than 50 percent of the wages normally paid to the employee.
Who is a qualifying employee ? Answer. A qualifying employee is any employee under the Fair Labor Standards Act who has been employed by the employer for one year or more and who, for the preceding year, had compensation of mot more that a certain amount. For an employer claiming a credit for wages paid to an employee in 2018, the employee must not have earned more than $12,000 in 2017.
What is the effective date of the paid family and medical leave credit ? Answer. The credit is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017, and it is not available for wages paid in taxable years beginning after December 31, 2019.
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