IRS Clarifies Tax Credits Under ARPA Are Available When Providing Time Off to Care for a Family Member Obtaining or Recovering from COVID-19 Vaccine

The IRS recently updated the frequently asked questions (FAQs) on the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARPA). The updates clarify that eligible employers can claim the credits for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the vaccine.

The paid sick and family leave credits reimburse eligible employers for the cost of providing paid sick and family leave for reasons related to COVID-19. The revised FAQs clarify this includes leave taken by employees to care for certain individuals to obtain immunization relating to COVID-19 or recover from immunization relating to COVID-19.

The FAQs include information on how eligible employers may claim the paid sick and family leave credits, including how to file for and compute the applicable credit amounts and receive advance payments for and refunds of the credits. Under ARPA, eligible employers, including businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, may claim tax credits for qualified leave wages and certain other wage-related expenses.