If you or your employees were negatively impacted during COVID-19, you might be eligible to retroactively claim this tax credit. The Families First Coronavirus Response Act (FFCRA) provides financial assistance to businesses of all sizes, including those with only an owner and no w-2 employees, by offering compensation for time off related to COVID-19 illnesses, quarantine, or caring for children whose schools were closed during the pandemic or needed to be home-schooled. Many Family Home child care providers who are sole proprietors or single-member LLCs may qualify for FFCRA, as businesses do not need to have w-2 employees and business owners can claim the credit for themselves. 

Note: FFCRA ran from March 15, 2020 through September 30, 2021. The credits are received by filing with the IRS. The deadline to file for 2020 FFCRA credits is April 15, 2024. As of this publication, the deadline to file for 2021 FFCRA credits is April 15, 2025. You may be viewing this document after the 2020 filing deadline has passed; if this is the case you will only file for FFCRA credits based on your 2021 eligibility. 

The Families First Coronavirus Response Act 

Did you have staff who needed time off in 2020 or 2021 for: 

• Coronavirus-19 (COVID) illness; 

• Quarantining because of a potential or direct COVID exposure; 

• Taking care of a family member with COVID; or 

• Taking care of your children because their child care provider or school was closed or limited to remote education? 

If you answered yes, to any of these questions, even if they were in the past, you may be able to qualify for federal funds. 

What is Families First Coronavirus Response Act Leave? 

When the pandemic struck, many small businesses could not afford to provide the additional sick leave that would be needed due to COVID-19 related illness or quarantine. Additionally, many schools closed in reaction to the pandemic, forcing countless parents to stay home with their children and support them with remote schooling. In many cases, these small businesses lacked the reserve funds needed to pay employees whose children were now at home, leaving them unable to return to work but with no income. As such, the Federal Government created the Families First Coronavirus Response Act (FFCRA) Leave which provides funds in the form of payroll tax credits to help alleviate the economic impact of needing to provide this leave. 

Businesses have until April 15, 2024 to amend their 2020 taxes, and until April 15, 2025 to amend their 2021 taxes and apply for this credit. 

Is my business eligible? 

If you have fewer than 500 employees, you can take advantage of the FFCRA. Even if you are a sole proprietor or self-employed and it is just you — you can take advantage of the program. 

PRO TIP If you have a PPP, you cannot “double count” the money. Make sure that the salary you are counting for the FFCRA is not the same as the PPP. For example, if you are claiming PPP forgiveness for all your salary in May 2020, you cannot also claim an FFCRA. 

How does it work? 

The FFCRA covers leave taken between April 1, 2020, and September 30, 2021. 

There are two types of leave available. 

Emergency Paid Sick Leave Act (EPSLA) 

First, the Emergency Paid Sick Leave Act (EPSLA) provides up to 80 hours of sick leave for employees: 

• At their regular rate of pay (up to $511 per day with a cap of $5,110 for the whole 80 hours) if the employee is quarantined for potential COVID-19 exposure or has COVID-19 symptoms. 

• At two-thirds their regular rate of pay (up to $200 per day with a cap of $2,000) if the employee is caring for someone under quarantine or a child (under 18) whose school or child care provider is closed or unavailable for reasons related to COVID-19. A school closure includes remote learning situations where the child is at home. 

Emergency Family and Medical Leave Expansion Act (EFMLEA) 

Second, the Emergency Family and Medical Leave Expansion Act (EFMLEA) provides up to 12 weeks of expanded family and medical leave with 10 of those weeks paid at two-thirds the employee’s regular rate of pay (up to $200 per day with a cap of $2,000) if the employee is unable to work (including telework) to care for a child whose school or childcare provider is 

closed due to COVID-19. A school closure includes remote learning situations where the child is at home. 

How do I get reimbursed? 

You get reimbursed through a “refundable tax credit.” That’s a technical way of saying the United States Treasury pays you using money from employment taxes. Think of this term as simply a “reimbursement” for the applicable wages. 

Reimbursement is handled differently if the employee taking the leave is a “W-2 employee” or a sole proprietor/self-employed individual. 

For W-2 Employees 

You can get reimbursement for W-2 employees by revising past FORM 941 submittals using an amendment (FORM 941X and instructions). 

For Sole Proprietors & the Self-Employed 

It is important to know you can claim the credit for 2020 or 2021, even if you already submitted your taxes. You will need to ask your tax preparer to file a FORM 1040X (FORM 1040X and instructions for Form 1040X) and use Form 7202: Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals (FORM 7202 and instructions for Form 7202). To help you with this process, we have created a supplemental worksheet (see below), which provides a way to share the data (and how to use the credit) with your tax preparer. You can also do this though the amendment process of most tax software programs.  

What else should I know? 

Employers may exclude healthcare providers or emergency responders from EPSLA and EFMLEA leave, and businesses with less than 50 employees can qualify for an exemption if the leave would jeopardize the viability of the business. 

DEVELOPED AND DESIGNED BY CIVITAS STRATEGIES 

Disclaimer: The information contained here has been prepared by Civitas Strategies on behalf of the New Mexico Early Childhood Education and Care Department, WESST, and Growing Up New Mexico and is not intended to constitute legal, tax, or financial advice. The Civitas Strategies team has used reasonable efforts in collecting, preparing, and providing this information, but does not guarantee its accuracy, completeness, adequacy, or currency. The publication and distribution of this information is not intended to create, and receipt does not constitute, an attorney-client or any other advisory relationship. Reproduction of this information is expressly prohibited. Only noncommercial uses of this work are permitted.

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