Form 8994
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Form 8994: Employer Credit for Paid Family and Medical Leave

This article discusses the requirements for an employer to qualify for the employer credit for paid family and medical leave, including what constitutes a qualifying employee, written policy documentary requirements, and the definition of family and medical leave.

What is Form 8994?

Form 8994 is an employer credit for paid family and medical leave from the Internal Revenue Service (IRS). This credit is available to “eligible employers” who have a written policy in place and pay qualifying employees for family and medical leave. Qualifying employees are defined as workers who have earned less than 60% of the amount specified by the IRS in the prior year and have been employed for a minimum of one year. The credit can range from 12.5% to 25% of certain wages depending on the employer’s policy and is claimed or elected on an amended or original tax return up to three years after the due date.

IRS Form 8994 – Who Needs to Fill It Out?

Form 8994 is required to be filed by partnerships and S corporations to claim the IRS employer credit for paid family and medical leave. Employers must have an eligible written policy in place that provides paid leave for any number of FMLA-specified purposes, and must meet minimum paid leave requirements for employees who are not covered by Title I of the FMLA. Qualifying employees are those who have been employed for at least a year and who have made annual compensation of no more than 60% of the currently applicable amount set under Section 414(q)(1)(B)(i). The written policy must also include “non-interference” language to ensure employers do not discriminate or interfere with the rights of employees.

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Step-by-Step: Form 8994 Instructions For Filling Out the Document

Filing form 8994 requires an eligible employer to figure their employer credit for paid family and medical leave. To qualify, the employer must have a written policy that satisfies certain requirements, including providing paid leave to any qualifying employee that has been employed for at least one year and whose compensation the preceding year doesn’t exceed an amount. This policy has to communicate the availability of paid leave to employees through reasonable means and cannot exclude any classifications of employees. Family and medical leave is specifically designated for the FMLA purposes, including the birth of a son or daughter, placement for adoption or foster care, caring for a service member, and others. Leave provided by employer’s short-term disability program may be characterized as family and medical leave, if it meets the other requirements.

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Below, we present a table that will help you understand how to fill out Form 8994.

Form 8994 Instructions
Filing Form 8994 requires an eligible employer to figure their employer credit for paid family and medical leave. To qualify, the employer must have a written policy that satisfies certain requirements, including providing paid leave to any qualifying employee that has been employed for at least one year and whose compensation the preceding year doesn’t exceed an amount. This policy has to communicate the availability of paid leave to employees through reasonable means and cannot exclude any classifications of employees. Family and medical leave is specifically designated for the FMLA purposes, including the birth of a son or daughter, placement for adoption or foster care, caring for a service member, and others. Leave provided by the employer’s short-term disability program may be characterized as family and medical leave if it meets the other requirements.
  • Ensure you meet the eligibility criteria for claiming the employer credit for paid family and medical leave.
  • Establish a written policy that complies with the specified requirements.
  • Communicate the availability of paid leave to employees.
  • Understand the various qualifying events for family and medical leave.
  • Be aware of how leave provided by the short-term disability program can be characterized.
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Do You Need to File Form 8994 Each Year?

Employers can choose to file Form 8994 annually to claim the employer credit for paid family and medical leave, within three years from the due date of the return on either the original return or an amended return. Partnerships and S corporations must file this form, while other taxpayers must report this credit directly on line 4j of Part III of Form 3800 if their only source for this credit is through a partnership or S corporation. The employer must have written policy in place that satisfies the minimum paid leave requirements and non-interference language, applicable to all qualifying employees, and must be in place before paid family and medical leave for which the employer claims the credit is taken. Qualifying employees must have been employed by the employer for one year or more and earned less than a certain amount of compensation in the preceding year. Finally, any leave made available to an employee that is specifically designated for one or more FMLA purposes and cannot be used for any other reason is considered family and medical leave.

Download the official IRS Form 8994 PDF

On the official IRS website, you will find a link to download Form 8994. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click the link below to quickly and easily download Form 8994

Sources:

https://www.irs.gov/forms-pubs/about-form-8994

https://www.irs.gov/instructions/i8994

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