How to Claim Your FFCRA Credits for Paid Leave
Eligible employers and self-employed individuals can still recover costs for past COVID-19 paid leave through a specific refundable tax credit.
The Families First Coronavirus Response Act (FFCRA) created refundable tax credits to reimburse eligible employers and self-employed individuals for the cost of paid leave for specific COVID-19 reasons. While the federal mandate for employers to provide this leave ended in 2020, the tax credits were extended for voluntary leave offered through September 30, 2021. The program was primarily for businesses with fewer than 500 employees and self-employed individuals who met similar criteria, providing a dollar-for-dollar reimbursement for qualified leave wages.
Determining Your Eligibility
Eligible Employers
Eligibility for FFCRA tax credits was aimed at private-sector employers with fewer than 500 employees. For the period from April 1, 2020, to December 31, 2020, an employee could take leave if they were subject to a government quarantine order, had been advised by a health care provider to self-quarantine, or were experiencing COVID-19 symptoms and seeking a diagnosis. Leave could also be taken to care for an individual under a similar quarantine order or for a child whose school was closed due to the pandemic.
The American Rescue Plan Act of 2021 extended the credits for employers who voluntarily provided leave from April 1, 2021, through September 30, 2021. This extension also expanded qualifying reasons to include leave needed to get a COVID-19 vaccination or recover from health issues related to it. The Act also extended eligibility to state and local governments for this same period.
Eligible Self-Employed Individuals
Self-employed individuals were also eligible to claim credits for sick and family leave under similar conditions. To qualify, an individual had to be regularly engaged in a trade or business and would have been eligible for paid leave under the FFCRA if they were an employee. The qualifying reasons for leave, and the extension through September 2021 that included vaccination-related leave, mirrored those available to employees.
Calculating Your FFCRA Credit
The FFCRA credit is based on the qualified leave wages paid. For sick leave taken for an employee’s own health needs, the credit was for wages paid at the employee’s regular rate, capped at $511 per day and $5,110 in total. If the leave was to care for another individual, the pay was limited to two-thirds of the employee’s regular rate, with a cap of $200 per day and $2,000 in total.
For qualified family leave taken to care for a child whose school was unavailable, the credit was for wages paid at two-thirds of the employee’s regular rate. This was capped at $200 per day and an aggregate of $10,000 over the entire leave period.
Employers could increase the total credit amount by including the cost of allocable qualified health plan expenses. The employer’s 1.45% share of Medicare tax on the qualified leave wages was also eligible to be included in the credit amount.
For a self-employed individual, the credit calculation was analogous. The credit was based on their average daily self-employment income and was subject to the same daily limits of $511 for their own care and $200 for the care of others.
Documentation and Recordkeeping Requirements
To substantiate a claim for FFCRA credits, employers must maintain detailed records for each employee’s leave. This includes the employee’s written request containing their name, the dates of leave, the COVID-19 related reason, and a statement that they are unable to work.
Further documentation is needed to verify the specific reason for the leave. Depending on the reason, this could include the name of the governmental entity that issued a quarantine order, the name of the advising health care provider, or the name of the child and the closed school or care provider.
Employers must also keep records showing how they calculated the qualified leave wages paid, including hours of leave taken. Documentation on how the employer determined the amount of qualified health plan expenses is also required. All related records should be retained for at least four years.
Self-employed individuals must maintain equivalent records to support their claim. This includes documentation showing they were unable to perform services for a qualifying reason and records that substantiate the calculation of their credit.
How to Claim Your FFCRA Credits
The deadlines to make an original claim for FFCRA credits for leave taken in 2020 and 2021 have passed. However, it may be possible to claim the credits by filing an amended tax return. Employers who paid qualified leave wages but did not claim the credits can file Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.
Self-employed individuals can amend their personal income tax return using Form 1040-X, Amended U.S. Individual Income Tax Return. The deadline to amend a 2020 tax return has passed. The deadline to amend a 2021 return is April 15, 2025.
For claims that were filed on time, the credit worked to offset tax liabilities, and the IRS issued a refund for any excess amount. During the eligibility period, employers could also request an advance payment of the credits by filing Form 7200, though this form is no longer used for this purpose.