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Employer Documentation Required to Claim the FFCRA Tax Credit

by | May 7, 2020 | CARES Act, FFCRA, Tax Credit |

Employers intending to claim a tax credit for payment of FFCRA leave should retain appropriate records to support a claim for the tax credit. The employer should keep all records of employment taxes for at least 4 years after the date the tax becomes due or is paid, whichever comes later.  These should be available for IRS review.These records include:

  • Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave.
  • Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages.
  • Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19.
  • Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS.
  • Documentation from the employee substantiating his/her eligibility for FFCRA leave.

Note the last required item for the tax credit is employee documentation substantiating eligibility for FFCRA leave. Thus, if the employee is not eligible for FFCRA leave, then the employer will not be entitled to a tax credit for providing leave to a non-eligible employee.