Tax credit and COVID vaccinations

Apr 26, 2021

The IRS announced today further details of the tax credit available under the American Rescue Plan to help small businesses to offer paid leave for employees receiving COVID-19 vaccinations. EBusiness owners can receive a tax credit for providing paid time off for each employee receiving the vaccine and for any time needed to recover from the vaccine. For example, if an eligible employer offers employees a paid day off in order to get vaccinated, the employer can receive a tax credit equal to the wages paid to employees for that day (up to certain limits).

The paid leave credits are tax credits against the employer’s share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax. These credits can be claimed on your Form 941. Self-employed individuals may claim comparable credits on the their personal Schedule C, Form 1040.

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