Tax Plan Analysis: for Business – Miscellaneous Deductions & Credits

Tax Plan Analysis: for Business – Miscellaneous Deductions & Credits

No Deduction for Sexual Harassment Settlements

No deduction is allowed for any settlement, payout or even attorney fees related to sexual harassment or sexual abuse if such payments are subject to a non-disclosure agreement.

Sandy’s Tax Planning Tip: I would bet that if there is a potential settlement of a harassment claim, new agreements will note that the settlement is for “wrongful termination” or as a form of “golden parachute” or for a “longevity” payout in order to try to get around this limitation.

New Credit for Employer Paid Family & Medical Leave

For wages paid in tax years beginning after December 31, 2017, but not beginning after December 31, 2019, the Act allows businesses to claim a general business credit equal to 12.5% of the amount of wages paid to qualifying employees during any period in which such employees are on family and medical leave (FMLA) if the rate of payment is at least 50% of the wages normally paid to an employee.

The credit is increased by 0.25 percentage points (but not above 25%) for each percentage point by which the rate of payment exceeds 50%

Sandy’s Elaboration: Thus, if the wages paid during medical or family leave exceed 50% of their normal wages, you can get an increased tax credit plus you can deduct any wages paid.

All qualifying full-time employees must be given at least two weeks of annual paid family and medical leave (all less-than-full-time qualifying employees must be given a commensurate amount of leave on a pro rata basis).

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Sandy Botkin