TaxBandits Knowledge Base

What are Qualified Family Leave Wages?

Qualified Family Leave Wages are wages paid to employees who are unable to work or telework due to caring for a child whose school or place of care was closed for COVID-19-related reasons. Under the Families First Coronavirus Response Act (FFCRA), employers were eligible for tax credits for paying these wages. However, employers can no longer claim COVID-19-related tax credits starting on or after the 2024 tax year.

Employers who paid qualified family leave wages in 2023 (or prior) for leave taken between March 31, 2020, and October 1, 2021, can claim a credit for those wages in the quarter they were paid.

Key details about qualified family leave wages:

• The first 10 days of leave are generally unpaid unless the employee is eligible for paid sick leave under the ESPLA or other policies.
• After the 10-day period, employers can provide up to 10 weeks of qualified family leave wages, paying at least two-thirds of the employee's regular rate of pay, up to $200 per day and a maximum of $10,000 for the year.
   

When reporting these wages on Form 941 for prior tax years:

• Column 1 should reflect the total amount of qualified family leave wages paid.
• Column 2 should show only 6.2% of the amount in Column 1, as these wages are exempt from the employer’s portion of the Social Security tax.
• The refundable credit for qualified family leave wages should be reported on line 13c.
• Any qualified health plan expenses related to these employees should be reported on line 20.