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National Work and Family Month is Here

Move over, Dracula! The IRS wants you to make room for tax-related updates, because it’s officially National Work and Family Month.

Parents across the country are spending quality time with their children, helping the little tykes prepare for a night of traipsing across the neighborhood in search of tooth-rotting treats. So it just makes sense that October is when lawmakers want to help you remind clients about family-related tax breaks. (I’m sure the timing has nothing to do with being a few short months away from next filing season. Right?)

The IRS pointed out that the Senate designed National Work and Family Month to “help communicate and celebrate progress towards creating more flexible work environments and helping individuals better balance their work-life commitments” back in 2003. Sixteen years later, the IRS is continuing the tradition.

The IRS has already sent two National Work and Family Month releases. The first spotlighted the Employer Credit for Paid Family and Medical Leave, and this week’s update focused on resources found in Publication 3, Armed Forces’ Tax Guide.

What does the IRS have to say about the Employer Credit for Paid Family and Medical Leave?

To take advantage of the Employer Credit for Paid Family and Medical Leave, the IRS says that employers must have a written paid-leave policy that satisfies these requirements:

  • At least two weeks of paid family and medical leave annually to full-time employees, prorated for part-time employees
  • Family and medical leave pay that is at least 50% of employee’s wages
  • It’s also important to note that the credit only applies if the qualifying employees “[earned] $72,000 or less” in the past two tax years. As it stands, the last taxable year for which most eligible employers can claim the Employer Credit for Paid Family and Medical Leave is 2019.

    Here’s how the credit is calculated, according to the “Section 45S Employer Credit for Paid Family and Medical Leave FAQs” page: “The amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year. The minimum percentage is 12.5% and is increased by 0.25% for each percentage point by which the amount paid to a qualifying employee exceeds 50% of the employee’s wages, with a maximum of 25%.”

    What does the IRS have to say about “Publication 3, Armed Forces’ Tax Guide?”

    “Publication 3, Armed Forces’ Tax Guide” is, predictably, a catchall of myriad tax benefits for military families. This week’s press release included seven common tax breaks:

  • Combat pay exclusion. Taxpayers may be able to exclude pay for service in a combat zone. But, they can choose to have their nontaxable combat pay included in their earned income for Earned Income Tax Credit purposes. Including nontaxable combat pay as earned income may decrease the amount of tax owed and may mean a larger refund. Taxpayers should calculate their taxes with the combat pay as earned income and without to find out what’s best for them.
  • Deadline extensions for combat zones and contingency operations. The various extensions granted to combat zone participants to file returns or pay taxes now also apply to military members serving in contingency operations outside the U.S. There are also deadline extensions available to military families living outside the United States. For more details see Publication 3.
  • Deduction of overnight travel expenses. Members of reserve components (including the National Guard) who stay overnight more than 100 miles from home while in service (for drill or other official duties) may deduct unreimbursed travel expenses.
  • Moving expenses may be tax deductible. If a member of the military moves because of a permanent change of station, they can deduct the reasonable unreimbursed expenses of moving for themselves and members of their household.
  • Sale of principal residence. Members of the military may not have to pay tax on all or part of any gain from the sale of their main home. This benefit depends on how long the taxpayer owns and lives in the home. However, those time rules can be suspended for military members on qualified official extended duty.
  • Dependent care assistance programs. Dependent care assistance programs for military personnel are generally not included in their income.
  • Military academy attendees. Generally, there is a 10% tax on payments from a Qualified Tuition Program or Coverdell Education Savings Account that are not used for educational expenses. However, the tax does not apply to attendees of the U.S. Military, Naval, Air Force, Coast Guard or Merchant Marine Academies, to the extent the payments do not exceed the costs of advanced education.
  • Check back to see what other advice the IRS has that you can pass on to your clients, and don’t forget to remind them to schedule a consultation visit to your office before filing season ramps up.

    Sources: IR-2019-166, IR-2019-169, “Section 45S Employer Credit for Paid Family and Medical Leave FAQs

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