How to get a tax credit for being vaccinated!
Vaccinated? Claim Tax Credits for Your Employees and Yourself
Whether by TV ad, church, friends or walking into any major chain pharmacy, our government really wants us all vaccinated. Regardless of your stance on COVID-19 or the Vaccine, it seems as if Covid is here to stay.
As a business owner you may feel that vaccinated employees may be the best for your business, as there is less risk of spread. (or at least that is what they say!)
Some business owners are going so far as to mandate vaccinations. This trend will likely grow as the FDA gives final approval to the various COVID-19 vaccines.
As with all things business the best way to convince or persuade -depending on how you look at it- you employees is to incentives getting the vaccine.
How you ask?
- Give employees paid time off to get the shot.
- Through September 30, employers who give their employees time off to get the vaccine can collect a refundable sick leave tax credit.
This not only incentives employees, but employers as well.
But there’s more.
The only thing better than an employee vaccinated, is getting his or her entire household to get the vaccine as well. So employers can also collect a sick or family leave credit if they give employees paid time off to help family members and other household members get the vaccination or recover from side effects of the vaccination.
Self Employed, No-employees? No Problem
The government wants to encourage you to get the vaccine too. You can collect for yourself a sick and/or family credit similar to the employer credits. The credits can add up. The combined (and refundable) sick and family leave credits add up to a maximum of $17,511 per employee or self-employed individual. (HELLO!)
Tax Credits for Employers
A business qualifies for the sick and family leave credits established by the American Rescue Plan Act of 2021 if it:
- Under 500 employees,
- Offers paid sick or family leave to its employees through September 30, 2021
- Employees who take paid leave due to COVID-19, include illness, quarantine, getting tested or vaccinated, or caregiving.
- Both the sick and family credits are available when employees are given paid leave to get the vaccine or to recover from it.
What the IRS has to say:
New guidance issued include eligible employers can also claim both credits for providing leave to employees who:
- Accompany a family or household member, or certain other individuals, to get the COVID-19 vaccination,
- Care for a family or household member, or certain other individuals, as they recover from getting the vaccination.
- When an employee accompanies or cares for an immediate family member, someone who regularly resides in the employee’s home, or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person.
There is no credit if an employee accompanies or cares for a person with whom he or she has no personal relationship.
Amount of sick leave credit.
Full-time employee are given time off to deal with his or her own vaccination or recovery. The employer can claim a sick leave credit equal to the employee’s regular wage (including the employer’s health insurance, Social Security, and Medicare contributions), capped at $511 per day, up to $5,110 in total.
The credit is limited to $200 per day, up to $2,000 for an employee taking time off to care for other household members’ vaccination needs. The sick leave credit is limited to wages up to 10 days.
Amount of family leave credit.
This credit limit is 2/3 of a full-time employee’s regular wage for up to 12 weeks. The cap is $200 per day, up to $12,000 in total.
The credits are also available for part-time employees who are normally scheduled to work fewer than 40 hours per week. This calculation is based on the number of hours they regularly work .
The sick and family leave credits are refundable
A business gets the full amount even if it exceeds its tax liability. A business can claim this credit in advance by reducing the employer payroll taxes (Social Security and Medicare taxes) it otherwise would have deposited with the IRS for the third quarter of 2021. If the amount of the credit exceeds a business’s payroll taxes, the business may request an advance by filing IRS Form 7200, Advance Payment of Employer Credits Due to COVID-19.
You can’t claim both credits for the same employee hours. So employers should use the sick leave credit first where the employee takes time off for his or her own vaccination and/or recovery.
Both credits are subject to non-discrimination rules. You can’t limit them to highly compensated, full-time, or long tenured employees.
The documentation
How to get these credits, not to worry, requirements for these credits are modest. You should have your employees make a written request for sick or family leave, to include:
- the date or dates for which leave is requested, and the date of the vaccination (if applicable),
- The reason for the COVID-19-related leave,
- A statement that the employee is unable to work, including by means of telework, for that reason.
The employer should also document how the employee’s sick and/or family leave credits were calculated.
Tax Credits for the Self-Employed
If you’re self-employed, you’re entitled to sick and family leave tax credits if, during the period from April 1, 2021, through September 30, 2021, you were unable to work or telework because you were
- obtaining a COVID-19 vaccination, or
- recovering from any injury, disability, illness, or condition related to such vaccination.
You can obtain sick or family leave credits if you need to accompany a family or household member to get a COVID-19 vaccine, or to care for such a person after they get the vaccine.
Sick leave credit.
The amount of the self-employed sick leave credit is the same as for employers. You can get a credit equal to 100% of the average net self employment income you earn per day, capped at $511 per day.
The credit is reduced to 67% for taking care of a household member getting the vaccine or their recovery. The cap is the same, $200 per day. The sick leave credit is for a maximum of 10 days. Thus, the maximum sick leave credit is $2,000.
You figure your average daily net self-employment income by dividing your total net self-employment income for the year (or the prior year) by 260. You may use the prior year if you earned more money that year (if you do this, you must note it on your Form 1040).
Family leave credit.
Whether you take time off to deal with your own vaccination or that of a household member, the family leave credit is equal to 67% of your net self-employment income. the capp is $200 per day, for 60 days (12 weeks). Thus, the maximum credit is $12,000.
Both the sick and family leave credits are refundable.
New IRS Form 7202, needs to be included with your 1040.
You and your spouse can both claim separate credits, if you are both self-employed.
You do not have to see a doctor to claim this credit. But you should create a record containing
- The dates you were unable to work because you obtained or recovered from a COVID-19 vaccination
- Statement that you could not perform services in your business (including teleworking) because of the COVID-19 vaccination.