The Vaccine Tax Credit was a tax credit created under the Families First Coronavirus Response Act (FFCRA), and was announced earlier this year by the President. It is designed to provide payroll tax credit relief to small employers and startups who have employees who have to take time off to receive a COVID vaccine or to recover from getting a COVID vaccine.
How much is the vaccine tax credit worth?
These credits are worth the employee’s daily wages, up to $511, per employee per day, capped at 10 days and $5,110. There are some nuances if the employee is taking time off not for themselves but instead to care for a family member.
How to get the vaccine tax credit
The credit is administered through your payroll provider. We’ve spoken with both Gusto and Rippling, and they have both created systems for you to easily claim these credits.
The credits are claimed quarterly, and it’s easiest to claim them before the end of the quarter for the current quarter - i.e. by June 30 for the second quarter payroll periods. However, it is possible for your payroll provider to amend the filings in Q3 to get you a credit for a leave of absence in Q2. Still, we recommend that you do it in the same quarter.
Ideally, if you payroll is set up to allow for the COVID time off, your employees will select COVID time off (or you administrator will do it for them) as it is happening, so that everything is accounted for in the same payroll period where the employee actually has to take time off.
If you are a Gusto customer, click here to understand how to file.
If you are a Rippling customer, click here to see how to get the credits.
If you are a Justworks customer, click here for details on how file for the credits.
If you have a different payroll provider, contact their customer service.
Important considerations
This is not free money from the government - it is specifically designed for companies where employees have actually had to take time off. These types of programs are likely to be audited by the IRS. Don’t be tempted to claim more sick leave than actually occurred; payroll tax fraud is very, very bad. If you are claiming this credit, make sure your employee actually had to take some time off to deal with the vaccine.
If you are running a clean payroll system, then they would have had to have requested the time off / taken the sick leave in the payroll (or an administrator would have imputed that information into your payroll system). However, both Gusto and Rippling have procedures for administrators to go in and retroactively put in the leave time.
