Pandemic Payroll Tax Credit Support

July 08, 2021

The coronavirus has adversely impacted Pennsylvania’s workforce.

An estimated 1.2 million residents have been diagnosed with coronavirus disease. Pennsylvania residents that tested positive for the virus missed work. Employees missed work due to the need to quarantine to stop the spread of the virus. Residents also missed work due to the need to care for ill family members. Other residents missed work due to the need to care for children with schools and daycare facilities that the government shut down.

The impact the absenteeism had on Pennsylvania small business owners and their employees is almost unmeasurable!

The Federal Government’s response to support the crisis was to pass The Families First Coronavirus Response Act (“FFCRA”).

The intention of passing this legislation was to allow employees to take care of themselves or their loved ones. Thus, putting families first during the pandemic. This act enabled employers to compensate impacted individuals for their time off without adversely affecting the business’s bottom line. The government compensated employers in the form of payroll tax credits.

Employers that compensated employees that missed work from April 1, 2020, thru September 30, 2021, to care for themselves or a loved one may be entitled to tax credits. Employers can request applicable tax credits upon submitting their quarterly tax returns. The tax credits may include support for maintaining health insurance, as well.

Some employers may qualify for dollar-for-dollar reimbursement through payroll tax credits for all qualifying wages paid under the FFCRA.

Here’s some more information about FFCRA:

  • Updates to FFCRA allow self-employed individuals eligibility for the FFCRA tax credit.
  • Employers that are just now recognizing that they paid someone for their respective time off and are eligible to receive tax credits can reclassify those wages. They can amend their quarterly reports and apply for the FFCRA tax credits.
  • Small business owners who want to learn more about FFCRA tax credits, including qualifications and how to receive the tax credits, may contact PaySmart for more information.
  • Small businesses that did not compensate affected employees may be able to retroactively pay employees for this time off and still file for tax credits. Companies wanting to learn more can contact PaySmart or visit our website.
  • Employers can receive the Payroll Protection Program (PPP) and be eligible and apply for FFCRA tax credits. However, the same wages cannot be a part of the payroll costs for loan forgiveness.
  • Small businesses may be eligible to receive FFCRA Tax Credits in addition to other support under the CARES ACT. Eligible Employers also meeting the requirements for the Employee Retention Credit may receive both credits. They are not able to do so for the same wage payments.

Businesses may qualify for the Employee Retention Credit (ERC).

  • Employers that received Payroll Protection Program (PPP funds) can also utilize the ERC Credits but not the same wages.
  • Businesses need to meet one of two qualifications to be eligible for the credit. They needed to have been shut down by the government or their gross receipts need to have been significantly decreased. Employers needed to have paid their employees to be eligible for Employee Retention Credit. Employers will receive a 50% tax credit on applicable wages paid to employees in 2020—a 70% tax credit on appropriate wages paid to employees per quarter in 2021.
  • Applying for the tax credits is similar to the FFCRA tax credits. Employers can apply for any applicable tax credits on their quarterly payroll tax returns.
  • PaySmart is available to support employers questioning their eligibility and would like to pursue any applicable tax credits on their quarterly returns.

As legislation changes, PaySmart is here to support the needs of the small business community.

We are proud to support local businesses as we get back to work!

PaySmart is a payroll provider located in Mechanicsburg, Pennsylvania, supporting small businesses in the Central PA region. We are dedicated to helping small businesses take care of their payroll needs. To learn more information about how PaySmart may provide payroll solutions, please contact us at 717-766-1777. Our New Client Concierge is waiting for you!