New Guidance Released on the Employer Credit for Paid Family and Medical Leave

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The Tax Cuts and Jobs Act (TCJA), enacted on December 22, 2017, provides a new tax credit  for tax years 2018 and 2019 to employers that provide paid family and medical leave to their employees.

In a recent Notice, the Internal Revenue Service provided detailed guidance on the mechanics of the new credit in a question and answer format. Among other things, the Notice

(1) clarifies how to calculate the credit;

(2) directs taxpayers how to apply special rules and limitations;

(3) specifies what must be included in an eligible employer’s written policy; and

(4) lists the purposes for which paid family and medical leave may be provided.

The Notice further provides that eligible employers that set up qualifying programs (or amend existing programs to qualify) by December 31, 2018 can claim the new credit, retroactive to the beginning of the 2018 tax year, for qualifying leave that may have already been provided.

Please contact Bob Grossman or Don Johnston, should you have questions or comments.