Disclaimer: This is general tax advice so don’t sue me. I had almost forgotten about the Families First Coronavirus Response Act (FFCRA) until I got a call from Bismarck McCabe UMC. They were on top of things and knew more than I did. The only question we still have is if clergy are covered.
Long story short, FFCRA gave employees an extra 80 hours of sick leave (or proportional if part-time) if they or a member of their family was directly affected by COVID. This is different than being affected by the shutdowns. You can see more about this in the links below. To help pay for this sick leave, you can claim a payroll tax credit! This is good news for churches that already file a quarterly Form 941.
Here’s what makes this credit so good:
- Dollar for Dollar: You get reimbursed 100% for this sick leave in most cases. This includes health insurance costs.
- Includes Health Insurance Costs: While few lay employees receive health benefits from the church, that portion can also be applied to the credit.
- Refundable: This credit is refundable. A lot of our churches don’t pay in much for payroll taxes so it’s nice to know that, when the credit is larger than the taxes, you’ll get a check back.
- GCFA’s Guidance: https://www.gcfa.org/media/2238/ffcra_rev05082020.pdf
- AGC Solutions was very helpful: https://www.youtube.com/channel/UCICcKk_CZPNIsUY0DmhzGbg
- 941 Form: https://www.irs.gov/pub/irs-pdf/f941.pdf
- 941 Instructions with Worksheet 1: https://www.irs.gov/pub/irs-pdf/i941.pdf