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Headline: What COVID Tax Credits Can a Bank Take?

 

Question:   We are confused about possible tax credits on employees related to COVID.  What can a bank use?

 Answer:   There were two different credits in the CARES Act, and the new legislation addresses both.

The Employee Retention Tax Credit is available for businesses that were closed due to a COVID-19 lockdown or who suffered a 50% decline in gross receipts.  This credit was extended to the first two quarters of 2021.  However, it is not likely that banks qualify for this one and should consult with their accountants before doing so.

The other credit is for the required paid leave under the Families First Coronavirus Relief Act (FFCRA). Banks that provided this mandatory paid sick and family leave can use a tax credit for that.  For more information go to the IRS COVID-19-Related Tax Credit page.  This credit could be claimed on Form 7200 up to the earlier of February 1, 2021 or the date employers file the Form 941 for the fourth quarter of 2020. 

The Coronavirus Relief Act extends that tax credit through March 2021 for employers that continue to voluntarily offer paid sick and family leave to their employees.  The mandatory provision of the FFCRA was not extended, however.

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