Practice Management Alert

Question: What is “family and medical leave” for purposes of the paid family and medical leave credit that is provisioned by the recent Tax Cuts and Jobs Act?

New Jersey Subscriber

Answer: The Internal Revenue Service (IRS) recently published guidance on which employers can take advantage of the tax credits, what criteria they must meet, and which employees are eligible for family medical leave and therefore the tax credit. Please note that the tax credit is meant to incentivize employers that voluntarily offer paid leave for certain family or medical conditions.

According to the IRS, family and medical leave would cover one or more of the following reasons:

• “Birth of an employee’s child and to care for the child.
• “Placement of a child with the employee for adoption or foster care.
• “To care for the employee’s spouse, child, or parent who has a serious health condition.
• “A serious health condition that makes the employee unable to perform the functions of his or her position.
• “Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty (or having been notified of an impending call or order to covered active duty) in the Armed Forces.
• “To care for a service member who is the employee’s spouse, child, parent, or next of kin.”

“If an employer provides paid vacation leave, personal leave, or medical or sick leave (other than leave specifically for one or more of the purposes stated above), that paid leave is not considered family and medical leave. In addition, any leave paid by a State or local government or required by State or local law will not be taken into account in determining the amount of employer-provided paid family and medical leave,” says the IRS’s “Section 45S Employer Credit for Paid Family and Medical Leave FAQs.”