--- title: New Business Tax Credit for Employers Providing Paid Family & Medical Leave description: Eligible employers who provide paid family and medical leave to their employees during tax years 2018 and 2019 might qualify for a new business tax credit. image: https://www.huntercpa.com/hubfs/Images/Images/FMLA-business-tax-credit.jpg --- [![huntercpa-logo-62020](https://www.huntercpa.com/hs-fs/hubfs/Images/huntercpa-logo-62020.png?width=250&height=130&name=huntercpa-logo-62020.png "huntercpa-logo-62020")](https://www.huntercpa.com) - [Planning](https://www.huntercpa.com/articles/topic/planning) - [Design Engineers](https://www.huntercpa.com/articles/topic/design-engineers) - [Professional Services Firm](https://www.huntercpa.com/articles/topic/professional-services-firm) ## [Becoming a Top Engineering Firm – Zoom Like a Rocket Ship!](https://www.huntercpa.com/articles/becoming-a-top-engineering-firm-zoom-like-a-rocket-ship) **Lewis Hunter** | Jul 23, 2020 7:15:00 AM A professional service firm such as an engineering design firm or construction engineering and inspection firm can be thought of as a rocket ship. Looking at the business as a rocket ship, it gets easier to remember and share the elements of developing a successful business. Like a rocket ship a business has two basic parts, the engines that power the ship, and the guidance systems to set course. Our rock ship has five engines and four guidance systems. Thinking back to when you first started your firm, if you did not go through the checklist you see below formally, you did so informally. - [Taxes](https://www.huntercpa.com/articles/topic/taxes) - [Planning](https://www.huntercpa.com/articles/topic/planning) - [IRS](https://www.huntercpa.com/articles/topic/irs) ### [New Business Tax Credit for Employers Providing Paid Family & Medical Leave](https://www.huntercpa.com/articles/new-business-tax-credit-for-employers-providing-paid-family-medical-leave) - [**](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.huntercpa.com%2Farticles%2Fnew-business-tax-credit-for-employers-providing-paid-family-medical-leave) - [**](https://www.twitter.com/share?url=https%3A%2F%2Fwww.huntercpa.com%2Farticles%2Fnew-business-tax-credit-for-employers-providing-paid-family-medical-leave) - [**](http://www.linkedin.com/shareArticle?mini=true&url=https://www.huntercpa.com/articles/new-business-tax-credit-for-employers-providing-paid-family-medical-leave) [All Posts](https://www.huntercpa.com/articles/all) # New Business Tax Credit for Employers Providing Paid Family & Medical Leave - [Tweet](https://twitter.com/share) ![FMLA-business-tax-credit](https://www.huntercpa.com/hs-fs/hubfs/Images/Images/FMLA-business-tax-credit.jpg?width=1200&name=FMLA-business-tax-credit.jpg) Eligible employers who provide paid family and medical leave to their employees during tax years 2018 and 2019 might qualify for a new business tax credit. This new employer credit for family and medical leave is part of [tax reform legislation](https://www.irs.gov/tax-reform) passed in December 2017. The intent of the business tax credit is to encourage companies to offer paid time to their employees for family responsibilities, offer relief of some financial pressure. Under the guidelines, employers can get a tax credit equivalent to a percentage of the wages normally paid to employees during any period for up to 12 weeks, who are on family or medical leave. Employers setting up or updating a leave policy may also be eligible for retroactive credit. Eligible employers who set up qualifying paid family leave programs or amend existing programs by Dec. 31, 2018 will be eligible to claim the employer credit for paid family and medical leave, retroactive to the beginning of the employer’s 2018 tax year, for qualifying leave already provided. The [general business credit](https://www.irs.gov/newsroom/section-45s-employer-credit-for-paid-family-and-medical-leave-faqs) employers may claim, based on wages paid to qualifying employees while they are on family and medical leave, are subject to certain conditions. Here are some facts about the credit to determine if your business might be able to claim it. **To be eligible, an employer must**: - Have a written policy that meets several requirements, as detailed in [Notice 2018-71](https://www.huntercpa.com/hubfs/Docs/HA-Content/n-18-71-Administrative-Procedural-and-Miscellaneous-family-leave-medical-leave.pdf). - Provide: **The credit applies to these dates**: - It is available for wages paid in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2020. **The amount of the credit**: - The credit is generally equal to 12.5% to 25% of paid family and medical leave for qualifying employees. **What kind of leave qualifies**: - The leave can be for any or all of the reasons specified in the Family and Medical Leave Act: - However, leave paid by a state or local government, or that is required to be provided by state or local law, does not count toward the 50%. **Some employers are eligible to claim the credit retroactively to the beginning of their taxable year**: - Normally employers can only claim the credit based on eligible leave taken after their new or amended policy goes into effect. - Read [Notice 2018-71](https://www.huntercpa.com/hubfs/Docs/HA-Content/n-18-71-Administrative-Procedural-and-Miscellaneous-family-leave-medical-leave.pdf) for a description of special rules for when an employer can claim the credit retroactively. **To claim the credit, employers will**: - Attach Form 8994 to their return. The IRS expects to have this new form available later in 2018. **The Notice sets out special rules and limitations that apply**: - For example, only paid family and medical leave provided to employees whose prior-year compensation was at or below a certain amount qualify for the credit. If you are considering adding benefits, you should also consider, however, that the credit sunsets at the end of 2019 unless reinstated by Congress. Also, according to IRS guidelines, any paid Family & Medical Leave wages that are considered for another credit (such as the Indian employment credit under Section 45A of the Code) may not be used for this credit. **Next Steps for Employers** Review existing paid Family & Medical Leave programs to consider whether they might be eligible for the tax credit. Understanding the new [Tax Reform Provisions that Affect Businesses](http://links.govdelivery.com:80/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTgwOTI1Ljk1MzIxNjQxJm1lc3NhZ2VpZD1NREItUFJELUJVTC0yMDE4MDkyNS45NTMyMTY0MSZkYXRhYmFzZWlkPTEwMDEmc2VyaWFsPTE3MjA4NjA3JmVtYWlsaWQ9YXNrQG1pY2hhZWxoYXJ0emVsbC5jb20mdXNlcmlkPWFza0BtaWNoYWVsaGFydHplbGwuY29tJmZsPSZleHRyYT1NdWx0aXZhcmlhdGVJZD0mJiY=&&&131&&&https://www.irs.gov/newsroom/businesses) is complex and time consuming. Tax planning is important to ensure you receive maximum benefits. [Contact me today](https://www.huntercpa.com/contact-us) to start the tax planning process today. ![lewis-hunter-cpa-sign](https://www.huntercpa.com/hs-fs/hubfs/Images/lewis-hunter-cpa-sign.png?width=281&name=lewis-hunter-cpa-sign.png) ![Lewis Hunter](https://www.huntercpa.com/hubfs/Images/Lewis-Hunter-cpa-122017-1.png) ###### ABOUT THE AUTHOR | Lewis Hunter Lewis founded Hunter & Associates in 1990 to help small-business owners achieve their potential. He manages the firm’s client relationships, regularly soliciting assessments of our team’s progress and seeking feedback on our performance and value-added services. He is an expert in cost accounting, overhead rate management and transition planning for architecture and engineering firms. Lewis also manages or performs all examinations of overhead rates that are reported to state transportation departments, including indirect cost rate audits for firms qualified as disadvantaged business enterprises (DBEs). He has managed the attestation services for applicants seeking reimbursement from the Florida Department of Environmental Protection for costs incurred in remediation of petroleum contamination of underground storage tanks as well. ![](https://cdn2.hubspot.net/hub/2558854/hubfs/DreamPack/letter%20Icon.png?t=1496817989590&width=86&name=letter%20Icon.png) ## Subscribe Subscribe now and receive regular updates! ** #### Subscribe Below! [![increasing-reimbursements-and-profits-at-your-architect-and engineering-cover-3d-600](https://www.huntercpa.com/hs-fs/hubfs/Images/Images/increasing-reimbursements-and-profits-at-your-architect-and%20engineering-cover-3d-600.png?width=600&name=increasing-reimbursements-and-profits-at-your-architect-and%20engineering-cover-3d-600.png "increasing-reimbursements-and-profits-at-your-architect-and engineering-cover-3d-600")](https://www.huntercpa.com/preparing-for-business-transition-workbook) ### Increasing Reimbursements and Profits at Your Architect & Engineering Firm --- #### 3 Steps to Optimizing Your FAR Overhead Rate [![Get Your Copy >](https://no-cache.hubspot.com/cta/default/2608589/2c6be903-4151-405c-960c-ab9aed106d3d.png)](https://cta-redirect.hubspot.com/cta/redirect/2608589/2c6be903-4151-405c-960c-ab9aed106d3d) Recent Posts - [Planning](https://www.huntercpa.com/articles/topic/planning) - [Design Engineers](https://www.huntercpa.com/articles/topic/design-engineers) - [Professional Services Firm](https://www.huntercpa.com/articles/topic/professional-services-firm) ## [Becoming a Top Engineering Firm – Zoom Like a Rocket Ship!](https://www.huntercpa.com/articles/becoming-a-top-engineering-firm-zoom-like-a-rocket-ship) #### A professional service firm such as an engineering design firm or construction engineering and inspection firm can be thought of as a rocket ship. Loo... [Read more](https://www.huntercpa.com/articles/becoming-a-top-engineering-firm-zoom-like-a-rocket-ship) - [Business Transition Planning](https://www.huntercpa.com/articles/topic/business-transition-planning) - [Exit Planning](https://www.huntercpa.com/articles/topic/exit-planning) - [Sell Business](https://www.huntercpa.com/articles/topic/sell-business) ## [Selling Your Business? The Next Buyer Could Already Work for You](https://www.huntercpa.com/articles/selling-your-business-the-next-buyer-could-already-work-for-you) #### There is nothing easy about deciding to sell the company you have poured much of your time and money into over the years. Your business was the center... [Read more](https://www.huntercpa.com/articles/selling-your-business-the-next-buyer-could-already-work-for-you) - [Change Management](https://www.huntercpa.com/articles/topic/change-management) - [Marketing](https://www.huntercpa.com/articles/topic/marketing) - [Sales](https://www.huntercpa.com/articles/topic/sales) - [Revenue](https://www.huntercpa.com/articles/topic/revenue) ## [Managing for Recovery – Marketing & Sales](https://www.huntercpa.com/articles/managing-for-recovery-marketing-sales) #### If products and services represent the nuts and bolts of the business, marketing and sales is the engine room that provides the drive for the business... [Read more](https://www.huntercpa.com/articles/managing-for-recovery-marketing-sales) - [Planning](https://www.huntercpa.com/articles/topic/planning) - [Change Management](https://www.huntercpa.com/articles/topic/change-management) - [Cash Management](https://www.huntercpa.com/articles/topic/cash-management) ## [Managing for Recovery – Cash Management](https://www.huntercpa.com/articles/managing-for-recovery-cash-management) #### Business owners and managers have probably never faced such a period of change as we are currently seeing. Change carries great risk, but where there ... 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[![hunter associates cpa](https://www.huntercpa.com/hs-fs/hubfs/Images/hunterassociates-logo-12018.png?width=204&name=hunterassociates-logo-12018.png "hunter associates cpa")](https://www.huntercpa.com/) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Lewis Hunter", "url" : "https://www.huntercpa.com/articles/author/lewis-hunter" }, "datePublished" : "2018-09-25T19:06:59.000Z", "headline" : "New Business Tax Credit for Employers Providing Paid Family & Medical Leave", "image" : [ "https://www.huntercpa.com/hubfs/Images/Images/FMLA-business-tax-credit.jpg" ], "mainEntityOfPage" : { "@id" : "https://www.huntercpa.com/articles/new-business-tax-credit-for-employers-providing-paid-family-medical-leave", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.huntercpa.com/hubfs/Images/hunterassociates-logo-12018.png" }, "name" : "Hunter & Associates, PA" } } ```