What the FFCRA credits covered
The credits reimbursed employers with fewer than 500 employees for qualifying paid sick leave and expanded family leave tied to COVID-19.
Under the original law, covered employers had to provide paid leave for specific pandemic-related reasons, such as quarantine orders, illness, or caring for a child whose school or care provider closed. In return, the employer could claim a credit against its share of payroll taxes. If the credit exceeded the taxes owed, the excess was refundable.
The credit also covered certain health plan costs tied to the leave. Self-employed individuals had a related credit that they claimed on their income tax return. Exact eligibility details were set by the IRS, so use the agency's published guidance for any past claim rather than memory.
Is the credit still available?
No. The required leave ended December 31, 2020, and the voluntary credit period under later legislation ended September 30, 2021.
New leave taken today does not generate this credit. If you see an offer claiming you can still collect it for current payroll, be skeptical and ask your CPA to review it.
What remains open is the ability to claim a credit for leave that was actually paid during the qualifying period, if you did not claim it at the time. That generally means filing an amended payroll return, and deadlines apply. Check with your accountant or the IRS for current filing windows, because limitation periods can pass.
Records you should still keep
Keep payroll records, leave documentation and the filed returns that show the credit, because the IRS can examine prior periods.
If you claimed the credit, hold on to the paperwork that supports it:
- Employee statements about the reason for leave
- Payroll registers showing the leave pay and the dates
- Copies of the quarterly payroll returns on which the credit was claimed
- Notes on how you counted employees to confirm the size test
A general rule is to keep tax records for at least as long as the period of limitations that applies, and longer where your accountant advises. See how long to keep business records for a practical approach.
Watch out for aggressive credit claims
Third parties have marketed tax credits that do not fit the rules. Claiming a credit you are not entitled to can bring repayment, interest and penalties.
Any credit that reduces payroll taxes deserves a second look. Questions to ask before relying on a claim:
- Did the law and the IRS say my business qualified for this period?
- Do I have documents proving each leave payment?
- Is the preparer a credentialed professional who will sign the return?
- Does the fee depend on a percentage of the refund, and is that disclosed?
If the answer to any of these is unclear, pause. Refunds that arrive and are later reversed can create a cash flow shock at the worst time. Our steps to make your business audit-proof cover good habits.
Cash flow lessons from the credit program
The credits reimbursed a cost after you paid it, which created a timing gap. That gap is the same problem small employers face with any delayed reimbursement.
Employers paid leave first, then recovered the cost through reduced payroll tax deposits. For businesses with thin margins, that sequencing mattered. A similar gap shows up when customers pay late, when an insurance reimbursement is pending, or when a government program pays after the fact.
Planning for these gaps means holding a reserve and knowing your options. A cash reserve is the cheapest cushion. If a gap is larger than your reserve, short-term working capital can bridge it.
When a funding bridge makes sense
If a refund, credit or receivable is owed to you but late, funding can cover payroll and bills in the meantime. It only makes sense when the cost is small relative to what is owed.
In this illustrative example, you are waiting on $30,000 you are confident you will receive in 60 to 90 days, and you need $30,000 now to meet payroll. If a funding cost of $4,000 keeps your team paid and your vendors current, the math may work. If the money is uncertain, borrowing against it is risky.
ROI Funder considers 500+ FICO, 6+ months in business and $20,000+ monthly revenue. Options include working capital and a business line of credit. Applying takes a few minutes and uses a soft credit pull.
Frequently asked questions
Can I still claim the FFCRA credit?
Only for qualifying leave paid during the covered period, and only if the filing window is still open. Ask your CPA to check deadlines.
Who qualified for the FFCRA payroll credit?
Employers with fewer than 500 employees that paid qualifying leave, plus self-employed individuals under a related credit.
Does a business loan affect tax credit eligibility?
Funding itself does not decide credit eligibility. Tax rules depend on the credit, so confirm details with a tax professional.
Where do I find official FFCRA guidance?
The IRS publishes guidance and forms for the credits. Use that source, not marketing from third parties.