IRS Issues Assistance on New Paid FMLA Tax Credit

The IRS just issued a FAQs sheet regarding the new Tax Cuts and Jobs Act of 2017 that created the Paid Family and Medical Leave Tax Credit. The tax credit allows eligible employers to claim a general business tax credit of up to twenty five percent of the wages paid when employees take paid family and medical leave.

Generally, in order to utilize the tax credit, an employer must have a written policy allowing for at least two weeks of paid FMLA and pay employees on FMLA leave at least fifty percent of their usual wages receive. In 2018, the tax credit will only be available for payments to employees who made less than Seventy Two Thousand Dollars in 2017.

Most forms of paid leave, (vacation leave, personal leave or sick leave) will not be considered paid FMLA leave for purposes of the Act and such payments will not be applicable for the tax credit.

Lastly, the FAQ indicated that the IRS was going to issue other FAQs addressing various aspects of the FMLA tax credit. I will keep an eye out for these FAQs and send out new updates as they are issued.

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