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フォーム8994、有料家族と医療休暇のための雇用主クレジットのための指示 (フォーム8994)の2021年1月改定に伴い使用する場合

2021年12月改訂

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Department of the Treasury  
Internal Revenue Service  
Instructions for Form 8994  
Employer Credit for Paid Family and Medical Leave  
(For use with the January 2021 revision of Form 8994)  
(Rev. December 2021)  
Section references are to the Internal Revenue Code  
unless otherwise noted.  
issued. Use prior revisions of the form and instructions for  
earlier tax years. All revisions are available at IRS.gov/  
Future Developments  
Eligible Employer  
For the latest information about developments related to  
Form 8994 and its instructions, such as legislation  
enacted after they were published, go to IRS.gov/  
An eligible employer is an employer with a written policy in  
place that provides paid family and medical leave and  
satisfies minimum paid leave requirements (see Minimum  
Paid Leave Requirements, later). In addition, if the  
employer employs any qualifying employees who aren’t  
covered by title I of the Family and Medical Leave Act  
(FMLA), the employer’s written policy must include  
“non-interference” language.  
What’s New  
New employment tax credits. You may have claimed  
coronavirus (COVID-19)-related employment credits on  
an employment tax return such as Form 941, Employer’s  
QUARTERLY Federal Tax Return. Certain wages used to  
figure these employment credits can’t also be used to  
figure a credit on Form 8994. For more information, see  
Wages defined under How To Figure the Credit.  
Non-interference language. If an employer employs at  
least one qualifying employee who isn’t covered by title I  
of the FMLA (including any employee who isn’t covered  
by title I of the FMLA because he or she works less than  
1,250 hours per year), the employer must include  
“non-interference” language in its written policy and  
comply with this language to be an eligible employer. This  
requirement applies to:  
Employee retention credit. Wages paid after June 30,  
2021, and before January 1, 2022, and used to figure the  
employer credit for paid family and medical leave can’t  
also be used to figure a coronavirus-related employee  
retention credit.  
An employer subject to title I of the FMLA that has at  
least one qualifying employee who isn’t covered by title I  
of the FMLA, and  
Reminder  
Credit extension. The Taxpayer Certainty and Disaster  
Tax Relief Act of 2020 extended the credit to cover tax  
years beginning in 2021 through 2025.  
An employer not subject to title I of the FMLA (that has  
no employees covered by title I of the FMLA).  
The “non-interference” language must ensure that the  
employer will not interfere with, restrain, or deny the  
exercise of, or the attempt to exercise, any right provided  
under the policy, and will not discharge, or in any other  
manner discriminate against any individual for opposing  
any practice prohibited by the policy. The following  
“non-interference” language is an example of a written  
provision that would satisfy this requirement: [Employer]  
will not interfere with, restrain, or deny the exercise of, or  
the attempt to exercise, any right provided under this  
policy. [Employer] will not discharge, or in any other  
manner discriminate against, any individual for opposing  
any practice prohibited by this policy.  
Written policy documentary requirements. An eligible  
employer’s written policy may be set forth in a single  
document or in multiple documents. For example, an  
employer may maintain different documents to cover  
different classifications of employees or different types of  
leave, and those documents will collectively constitute the  
employer’s written policy. An eligible employer’s written  
policy may also be included in the same document that  
governs the employer’s other leave policies.  
General Instructions  
Purpose of Form  
An eligible employer (defined later) uses Form 8994 to  
figure the employer credit for paid family and medical  
leave. The credit ranges from 12.5% to 25% of certain  
wages paid to a qualifying employee while the employee  
is on family and medical leave.  
You can claim or elect not to claim the employer credit  
for paid family and medical leave any time within 3 years  
from the due date of your return on either your original  
return or an amended return.  
Partnerships and S corporations must file this  
form to claim the credit. All other taxpayers must  
not complete or file this form if their only source for  
TIP  
this credit is a partnership or S corporation. Instead, they  
must report this credit directly on line 4j in Part III of Form  
3800, General Business Credit.  
Written policy in place. The employer’s written policy  
must be in place before the paid family and medical leave  
for which the employer claims the credit is taken. The  
written policy is considered to be in place on the later of  
the following dates.  
Which Revision To Use  
Use the January 2021 revision of Form 8994 for tax years  
beginning in 2020 or later, until a later revision is issued.  
Use this December 2021 revision of the instructions for  
tax years beginning in 2021 or later, until a later revision is  
The policy’s adoption date.  
Dec 21, 2021  
Cat. No. 69663D  
 
The policy’s effective date.  
hours per year to be a qualifying employee. Until further  
guidance is issued, any requirement that an employee  
work a minimum number of hours to be a qualifying  
employee would not be viewed as a reasonable method  
for determining whether an employee has been employed  
for 1 year. The rules under section 101(2)(A)(ii) of title I of  
the FMLA, which require an employee to work a minimum  
of 1,250 hours of service to be an eligible employee under  
the FMLA, don’t apply.  
Written policy may not exclude any classification of  
employees. An employer’s written policy may not  
exclude any classification of employees (for example,  
collectively bargained employees) if they are qualifying  
employees.  
Example 1. You have an insured short-term disability  
plan that provides disability benefits to any employee who  
becomes disabled after having completed 6 months of  
continuous service. Under the plan, a disability caused by  
or resulting from a pre-existing condition isn’t covered if  
the disability begins in the first 12 months after the  
effective date of coverage. For purposes of the plan, a  
pre-existing condition is one for which an employee  
consulted a physician, received medical treatment, or took  
prescribed drugs in the 3 months immediately prior to the  
effective date of coverage. The exclusion from coverage  
for pre-existing conditions applies to all your employees  
during the applicable 12-month period. Employees  
subject to the pre-existing condition exclusion are  
effectively not covered under the plan when they first  
become qualifying employees. In addition, in some cases,  
the requirement that the employee complete 6 months of  
continuous service might exclude some qualifying  
employees. Therefore, the plan will not in all cases cover  
all qualifying employees. You can’t claim the credit for  
paid family and medical leave provided under the written  
policy with respect to any of your employees.  
Example 2. The facts are the same as in Example 1,  
except that you adopt a written policy that provides for  
paid leave to any qualifying employee who isn’t covered  
under the short-term disability plan as a result of the 6  
months of service requirement or the pre-existing  
condition exclusion. This leave is paid from your general  
assets and the length of the paid leave is the same as the  
leave that would have been available under the short-term  
disability plan if neither the 6 months of service  
Example. You adopt a written policy that satisfies all of  
the requirements discussed in these instructions on June  
15, 2021, with an effective date of July 1, 2021. Assuming  
all other requirements for the credit are met, you can claim  
the credit with respect to family and medical leave paid in  
accordance with that policy to qualifying employees for  
leave taken on or after July 1, 2021.  
Providing notice of written policy to employees.  
Employers aren’t required to provide notice of the written  
policy to qualifying employees to claim the credit.  
However, if an employer chooses to provide notice of the  
written policy to qualifying employees, the policy will not  
be considered to provide for paid leave to all qualifying  
later), unless the availability of paid leave is  
communicated to employees in a manner reasonably  
designed to reach each qualifying employee. This may  
include, for example, email communications, use of  
Internet websites, employee handbooks, or posted  
displays in employee work areas.  
Qualifying Employee  
A qualifying employee is an employee (as defined in  
section 3(e) of the Fair Labor Standards Act of 1938  
(FLSA), as amended) who has been employed by the  
employer for 1 year or more, and whose compensation for  
the preceding year doesn’t exceed an amount equal to  
60% of the amount applicable for that year under section  
414(q)(1)(B)(i).  
For 2020 and 2021, the applicable amount of  
compensation under section 414(q)(1)(B)(i) is $130,000.  
Accordingly, to be a qualifying employee in 2021 or 2022,  
an employee must have earned no more than $78,000  
(60% of $130,000) in compensation in the preceding year.  
For 2022, the applicable amount of compensation  
under section 414(q)(1)(B)(i) is $135,000. Accordingly, to  
be a qualifying employee in 2023, an employee must have  
earned no more than $81,000 (60% of $135,000) in  
compensation in the preceding year.  
For this purpose, an employer whose tax year isn’t the  
calendar year can choose to use as the preceding year  
either:  
The employer’s immediately preceding fiscal year, or  
The calendar year ending in the employer’s  
requirement nor the pre-existing condition exclusion  
applied to a qualifying employee. Taking into account the  
leave available under your insured short-term disability  
plan and your supplemental self-insured paid leave  
arrangement, your written policy doesn’t exclude any  
classification of qualifying employees and, assuming all  
other requirements for the credit are met, you can claim  
the credit for paid family and medical leave provided  
under the written policy.  
immediately preceding fiscal year.  
An employee’s compensation is determined under  
section 415(c)(3).  
Employed for 1 year or more. Until further guidance is  
issued, an employer may use any reasonable method to  
determine whether an employee has been employed for 1  
year or more. Treating employees as employed for 1 year  
or more if they have been employed for 12 months, as set  
forth in section 825.110(b) of the FMLA regulations, 29  
CFR 825.110(b), is an example of a reasonable method.  
However, any requirement that an employee work 12  
consecutive months to be a qualifying employee would  
not be viewed as a reasonable method for determining  
whether an employee has been employed for 1 year.  
Family and Medical Leave  
Family and medical leave generally means leave for any  
one or more FMLA purposes (as defined below).  
However, if an employer provides paid leave as vacation  
leave, personal leave, or medical or sick leave (other than  
leave specifically for one or more of the FMLA purposes),  
that paid leave isn’t considered family and medical leave.  
Minimum number of hours per year not required. An  
employee isn’t required to work a minimum number of  
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Instructions for Form 8994 (December 2021)  
   
the fact that the leave is available to care for additional  
individuals not specified in the FMLA (for example, a  
grandchild or grandparent who has a serious medical  
condition). In this limited circumstance, the fact that the  
leave could also be used to care for additional individuals  
for whom care under the FMLA purpose isn’t required  
doesn’t prevent the leave from being considered  
FMLA purposes. The following are FMLA purposes for  
which paid family and medical leave may be provided to a  
qualifying employee.  
The birth of a son or daughter of the employee and in  
order to care for the son or daughter.  
The placement of a son or daughter with the employee  
for adoption or foster care.  
specifically designated for an FMLA purpose. However,  
the employer can’t claim the credit for any leave taken to  
care for an individual other than a qualifying employee’s  
spouse, parent, or child.  
Caring for the spouse, or a son, daughter, or parent of  
the employee, if the spouse, son, daughter, or parent has  
a serious health condition.  
A serious health condition that makes the employee  
Example. Your written policy provides 4 weeks of  
annual paid leave to care for family members with a  
serious health condition. The policy’s definition of “family  
members” includes the individuals specified in the FMLA  
(spouse, children, and parents), and also includes  
grandparents, grandchildren, and domestic partners. Your  
employee uses 1 week of annual paid leave to care for her  
grandmother, and, at a later time, uses 1 week of annual  
paid leave to care for her son. Your policy provides paid  
leave specifically designated for an FMLA purpose.  
Although the paid leave taken by the employee to care for  
her grandmother isn’t family and medical leave, the paid  
leave taken by the employee to care for her son is family  
and medical leave for which you can claim the credit  
assuming all other requirements for the credit are met.  
Leave provided by employer’s short-term disability  
program. Paid leave provided under an employer’s  
short-term disability program, whether self-insured by an  
employer or provided through a short-term disability  
insurance policy, may be characterized as family and  
medical leave if it otherwise meets the requirements to be  
family and medical leave.  
unable to perform the functions of the employee’s  
position.  
Any qualifying exigency (as the Secretary of Labor  
shall, by regulation, determine) arising out of the fact that  
the spouse, or a son, daughter, or parent of the employee  
is a member of the U.S. Armed Forces (including the  
National Guard and Reserves) who is on covered active  
duty (or has been notified of an impending call or order to  
covered active duty).  
Caring for a service member with a serious injury or  
illness if the employee is the spouse, son, daughter,  
parent, or next of kin of the service member.  
The FMLA purposes are the purposes for which an  
employee may take leave under the FMLA. These terms  
have the same meaning as defined in section 825.102 of  
the FMLA regulations, 29 CFR 825.102.  
Leave specifically designated for FMLA purposes.  
Other than paid leave to care for additional individuals,  
paid leave made available to an employee is considered  
family and medical leave only if the leave is specifically  
designated for one or more FMLA purposes, may not be  
used for any other reason, and is not paid by a state or  
local government or required by state or local law.  
Example 1. Your written policy provides 6 weeks of  
annual paid leave for the birth of an employee’s child, and  
to care for that child (an FMLA purpose). The leave may  
not be used for any other reason. No paid leave is  
provided by a state or local government or required by  
state or local law. Your policy provides 6 weeks of family  
and medical leave.  
Example 2. Your written policy provides 3 weeks of  
annual paid leave that is specifically designated for any  
FMLA purpose and may not be used for any other reason.  
No paid leave is provided by a state or local government  
or required by state or local law. Your policy provides 3  
weeks of family and medical leave.  
Example 3. Your written policy provides 3 weeks of  
annual paid leave for any of the following reasons: FMLA  
purposes, minor illness, vacation, or specified personal  
reasons. No paid leave is provided by a state or local  
government or required by state or local law. Your policy  
doesn’t provide family and medical leave because the  
leave isn’t specifically designated for one or more FMLA  
purposes and can be used for reasons other than FMLA  
purposes. This is true even if an employee uses the leave  
for an FMLA purpose.  
Minimum Paid Leave Requirements  
For an employer to be eligible to claim the credit, the  
employer’s written policy must meet certain minimum  
requirements with respect to paid family and medical  
leave. These requirements are:  
The policy must provide at least 2 weeks of annual paid  
family and medical leave to all qualifying employees who  
aren’t part-time employees, and at least a proportionate  
amount of paid family and medical leave to qualifying  
employees who are part-time employees;  
The policy must require a rate of payment that isn’t less  
than 50% of the wages normally paid to the qualifying  
employee for services performed for the employer; and  
If the employer employs one or more qualifying  
employees who aren’t covered by title I of the FMLA, the  
employer’s written policy must also include the “non-  
interference” language discussed earlier.  
Any leave that is paid by a state or local government or  
required by state or local law isn’t taken into account for  
any purpose in determining the amount of paid family and  
medical leave provided by the employer.  
Minimum Period of Leave Requirement  
An employer’s written policy must provide qualifying  
employees who aren’t part-time employees with at least 2  
weeks of annual paid family and medical leave and must  
provide at least a proportionate amount of annual paid  
family and medical leave to qualifying employees who are  
part-time employees. For part-time employees, the paid  
Leave to care for additional individuals. An  
employer’s written policy may provide paid leave that  
otherwise would be specifically designated for an FMLA  
purpose (for example, to care for a spouse, child, or  
parent who has a serious medical condition), except for  
Instructions for Form 8994 (December 2021)  
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leave ratio must be at least equal to the ratio of the  
expected weekly hours worked by a qualifying employee  
who is a part-time employee to the expected weekly hours  
worked by an equivalent qualifying employee who isn’t a  
part-time employee. In determining the amount of paid  
family and medical leave provided by the employer, any  
leave paid by a state or local government or required by  
state or local law isn’t taken into account.  
Example. Your written policy provides 4 weeks of  
annual paid family and medical leave to a qualifying  
employee expected to work 40 hours per week, and 2  
weeks of paid family and medical leave to an equivalent  
qualifying employee who is a part-time employee and is  
expected to work 20 hours per week. All of your  
Leave paid by a state or local government or re-  
quired by state or local law. Leave paid by a state or  
local government or required by state or local law isn’t  
taken into account in determining whether an employer’s  
written policy provides a rate of payment of at least 50% of  
the wages normally paid to an employee for services  
performed for the employer. To be eligible to claim the  
credit, an employer must independently satisfy the  
minimum paid leave requirements, including providing a  
rate of payment of at least 50% of wages normally paid to  
an employee.  
Example 1. Under state law, an employee on family  
and medical leave is eligible to receive 6 weeks of  
benefits paid by a state insurance fund at a rate of 50% of  
the employee’s normal wages. Additionally, your written  
policy concurrently provides each qualifying employee  
with 6 weeks of annual paid family and medical leave at a  
rate of payment of 30% of the wages normally paid to the  
employee for services performed for the employer.  
Consequently, in the aggregate, a qualifying employee  
can receive 6 weeks of annual paid family and medical  
leave at a rate of payment of 80% of the wages normally  
paid to the employee. Your policy doesn’t independently  
satisfy the requirement that the rate of payment be at least  
50% of the wages normally paid to an employee.  
Example 2. The facts are the same as in Example 1,  
except that your written policy provides each qualifying  
employee with 6 weeks of annual paid family and medical  
leave at a rate of payment of 50% of the wages normally  
paid to the employee that runs concurrently with the state  
leave. Consequently, in the aggregate, a qualifying  
employee can receive 6 weeks of annual paid family and  
medical leave at a rate of payment of 100% of the wages  
normally paid to the employee. Your policy independently  
satisfies the requirement that the rate of payment be at  
least 50% of the wages normally paid to an employee.  
Only wages paid under your written policy (50% of wages  
normally paid to the employee) can be used to figure the  
credit. Wages paid pursuant to state law aren’t used to  
figure the credit.  
employees work either 20 or 40 hours per week. Your  
policy meets the minimum paid leave requirements  
because each employee who isn’t a part-time employee  
may take at least the minimum 2 weeks of annual paid  
leave and each part-time employee may take at least a  
proportionate number of weeks of leave. Specifically, with  
respect to the proportionate amount, the ratio of expected  
weekly hours worked by a qualifying employee who is a  
part-time employee (20 hours) to the expected weekly  
hours worked by an equivalent qualifying employee who  
isn’t a part-time employee (40 hours) is 1:2, and the policy  
provides 2 weeks of paid leave to qualifying employees  
who are part-time employees and 4 weeks of paid leave to  
equivalent qualifying employees who aren’t part-time  
employees, satisfying the 1:2 ratio.  
Part-time employees. A part-time employee is an  
employee who is customarily employed for fewer than 30  
hours per week. Until further guidance is issued, an  
employer may use any reasonable method to determine  
how many hours an employee customarily works per  
week for the employer. Reasonable methods include the  
methods set forth in 29 CFR section 2530.200b-2 for  
calculating hours of service in connection with certain  
plans, such as qualified pension plans, subject to the  
Employee Retirement Income Security Act of 1974, as  
amended.  
Example 3. Under state law, employers are required to  
provide employees 6 weeks of family and medical leave,  
and the state law permits this leave to be either paid or  
unpaid. Your written policy provides each qualifying  
employee with 6 weeks of annual paid family and medical  
leave at a rate of payment of 50% of the wages normally  
paid to the employee. Your policy independently satisfies  
the requirement that the rate of payment be at least 50%  
of the wages normally paid to an employee.  
Minimum Rate of Payment Requirement  
The employer’s written policy must provide that each  
qualifying employee who is on paid family and medical  
leave will be paid at least 50% of the wages normally paid  
to the employee for services performed for the employer.  
In determining the rate of payment under the policy, leave  
paid by a state or local government or required under  
state or local law isn’t taken into account.  
Wages normally paid to an employee. Wages  
normally paid to an employee means the wages normally  
paid to the employee for services performed for the  
employer. Overtime (other than regularly scheduled  
overtime) and discretionary bonuses are excluded from  
wages normally paid. Until further guidance is issued, for  
employees who are paid (in whole or in part) on a basis  
other than a salaried or hourly rate, an employer must  
determine wages normally paid to the employee using the  
rules for determining regular rate of pay set forth in  
regulations issued under the FLSA. See 29 CFR section  
778.109.  
Rate of Payment or Period Not Required To Be  
Uniform  
An employer’s rate of payment or period of paid family  
and medical leave isn’t required to be uniform with respect  
to all qualifying employees and for all FMLA purposes.  
However, to the extent an employer’s policy provides  
different rates of payment or periods of paid family and  
medical leave for different FMLA purposes, the minimum  
paid leave requirements must be satisfied with respect to  
each FMLA purpose for which the employer intends to  
claim the credit. Conversely, if an employer’s policy  
provides a uniform rate of payment and period of paid  
family and medical leave for all qualifying employees and  
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Instructions for Form 8994 (December 2021)  
 
for all FMLA purposes (or a uniform rate of payment and  
period for several specified FMLA purposes), the policy as  
a whole must satisfy the minimum paid leave  
increased by 6.25% (0.25% × 25), for an applicable  
percentage of 18.75% (12.5% + 6.25%).  
Example 2. The facts are the same as in Example 1,  
except that your written policy provides each qualifying  
employee who has at least 10 years of service a rate of  
payment of 100% of the wages normally paid to the  
employee for services performed by the employee, rather  
than 75%. Because the rate of payment for a qualifying  
employee who has at least 10 years of service is 100%  
(which is 50 percentage points greater than 50%), the  
base applicable percentage for these employees is  
increased by 12.5% (0.25% × 50), for an applicable  
percentage of 25% (12.5% + 12.5%). For a qualifying  
employee who has less than 10 years of service, the  
applicable percentage is the same as determined in  
Example 1.  
requirements, and it isn’t necessary for the minimum paid  
leave requirements to be satisfied separately with respect  
to each FMLA purpose.  
Example 1. Your written policy provides each  
qualifying employee with 6 weeks of annual paid leave for  
the birth or adoption of the employer’s child, or to care for  
that child (an FMLA purpose) at a rate of payment of  
100% of wages normally paid to the employee for  
services performed for you. For all other FMLA purposes,  
the policy provides each qualifying employee with 2  
weeks of annual paid leave at a rate of payment of 75% of  
wages normally paid to the employee. Your written policy  
satisfies the minimum paid leave requirements.  
Example 2. Your written policy provides each  
How To Figure the Credit  
qualifying employee with 2 weeks of annual paid leave for  
the birth or adoption of the employee’s child, or to care for  
that child (an FMLA purpose) at a rate of payment of  
100% of wages normally paid to the employee, and also  
provides each qualifying employee who isn’t covered by a  
collective bargaining agreement with 2 weeks of annual  
paid leave for a serious health condition that makes the  
employee unable to perform the duties of his or her  
position (also an FMLA purpose) at a rate of payment of  
100% of wages normally paid to the employee. The  
portion of your policy that provides paid leave to each  
qualifying employee for the birth or adoption of the  
employee’s child, or to care for that child, satisfies the  
minimum paid leave requirements. However, the portion  
of the policy providing only certain qualifying employees  
(those who aren’t covered by a collective bargaining  
agreement) with paid leave for a serious health condition  
that makes the employee unable to perform the duties of  
his or her position doesn’t satisfy the minimum paid leave  
requirements, and you can’t claim the credit for any leave  
taken under that portion of the policy.  
In the case of an eligible employer, the credit is an amount  
equal to the applicable percentage of the amount of  
wages paid to qualifying employees during any period in  
which such employees are on family and medical leave.  
The term “applicable percentage” means 12.5%  
increased (but not above 25%) by 0.25 percentage points  
for each percentage point by which the rate of payment  
exceeds 50%. See Applicable Percentage, earlier.  
The amount of family and medical leave that may be  
taken into account with respect to any qualifying  
employee for any tax year may not exceed 12 weeks. The  
credit with respect to any qualifying employee for any tax  
year can’t exceed an amount equal to the product of the  
employee’s normal hourly wage rate for each hour (or  
fraction thereof) of actual services performed for the  
employer and the number of hours (or fraction thereof) for  
which family and medical leave is taken.  
Figuring the credit. The credit is equal to the applicable  
percentage of the amount of wages paid to a qualifying  
employee during any period (up to 12 weeks) that the  
employee is on family and medical leave.  
Example 3. Your written policy provides each  
qualifying employee with 2 weeks of annual paid leave for  
any FMLA purpose at a rate of payment of 100% of the  
wages normally paid to the employee, and each qualifying  
employee who has 10 years of service with an additional 2  
weeks of annual paid leave for any FMLA purpose at a  
rate of payment of 100% of wages normally paid to the  
employee. Your policy satisfies the minimum paid leave  
requirements.  
Example 1. Your written policy provides each  
qualifying employee with 4 weeks of annual paid family  
and medical leave at a rate of payment of 75% of wages  
normally paid to the employee. During 2021, your  
employee takes 4 weeks of leave under the policy. The  
employee is normally paid $1,000 per week. You pay the  
employee a total of $3,000 ($750 per week for 4 weeks)  
for family and medical leave. Assuming all other  
requirements for the credit are met, you can claim a credit  
of $562.50 with respect to the employee (18.75% of  
$3,000).  
Applicable Percentage  
The applicable percentage is based on the rate of  
payment for the leave under the employer’s policy. The  
base applicable percentage of 12.5% applies if the rate of  
payment is 50%. If the rate of payment under the policy is  
greater than 50%, the applicable percentage is increased  
by 0.25 percentage points for each percentage point by  
which the rate of payment exceeds 50%, up to a  
Example 2. The facts are the same as in Example 1,  
except that your written policy provides each qualifying  
employee who has at least 10 years of service with a rate  
of payment of 100% of the wages normally paid to the  
employee. During 2021, Employee A, who has been  
employed for 12 years, takes leave under the policy for 4  
weeks, and Employee B, who has been employed for 5  
years, takes leave under the policy for 2 weeks. Both  
Employee A and Employee B are normally paid $1,000  
per week. You pay Employee A a total of $4,000 and  
Employee B a total of $1,500 for family and medical leave.  
Assuming all other requirements for the credit are met,  
maximum applicable percentage of 25%.  
Example 1. Your written policy provides each  
qualifying employee with 4 weeks of annual paid family  
and medical leave at a rate of payment of 75% of the  
wages normally paid to the employee. Because the rate of  
payment under the policy exceeds 50% by 25 percentage  
points, the base applicable percentage of 12.5% is  
Instructions for Form 8994 (December 2021)  
-5-  
 
you can claim a total credit of $1,281.25 with respect to  
Employee A and Employee B. The credit for Employee A  
is $1,000 (25% of $4,000), and the credit for Employee B  
is $281.25 (18.75% of $1,500).  
wages paid by the employer aren’t wages for purposes of  
the credit. Consequently, amounts paid by the employer  
to its employees while on paid family and medical leave  
aren’t eligible for the credit.  
Wages defined. The term “wages” has the same  
Wages paid by third-party payer. Wages paid by a  
third-party payer (including an insurance company, a  
professional employer organization, or a Certified  
Professional Employer Organization) to qualifying  
employees for services performed for an eligible employer  
are considered wages for purposes of the credit.  
However, only the eligible employer, and not the  
third-party payer, can take these wages into account  
when figuring the credit.  
Leave paid by a state or local government or re-  
quired by a state or local law. Leave paid by a state or  
local government or required by a state or local law isn’t  
taken into account when figuring the credit.  
Wages paid through a short-term disability program.  
Wages paid through an employer’s short-term disability  
program for family and medical leave are taken into  
account in figuring the credit provided that the program (in  
combination with any other employer-paid leave  
arrangement) meets the minimum paid leave  
requirements.  
Employee becomes a qualifying employee after  
leave is taken. An eligible employer may claim the credit  
only with respect to wages paid to an employee who is a  
qualifying employee at the time family and medical leave  
is taken. Wages paid to an employee for family and  
medical leave before an employee becomes a qualifying  
employee are excluded in determining the employer’s  
credit. However, if an employer’s written policy provides  
that employees may take paid family and medical leave  
before they become qualifying employees and doesn’t  
provide a dedicated amount of leave meeting the  
minimum paid leave requirements that may only be taken  
after an employee becomes a qualifying employee, the  
leave will not fail to (a) be specifically designated for an  
FMLA purpose, or (b) meet the minimum paid leave  
requirements, solely because an employee may take paid  
leave before becoming a qualifying employee.  
Example. Your written policy provides all employees  
who have completed at least 6 months of employment  
with 4 weeks of annual paid family and medical leave at a  
rate of payment of 100% of wages normally paid to the  
employee for services performed by the employee. Your  
employee completes 6 months of employment with you as  
of January 1, 2021, and 1 year of employment (becoming  
a qualifying employee) as of July 1, 2021. On June 15,  
2021, your employee begins a 4-week period of paid  
family and medical leave under the policy. Assuming all  
other requirements for the credit are met, you can use  
wages paid to the employee for family and medical leave  
on or after July 1, 2021, the date that employee becomes  
a qualifying employee, to figure the credit. Wages paid for  
family and medical leave taken before the employee  
becomes a qualifying employee aren’t eligible for the  
credit.  
meaning given to that term by section 3306(b) (regarding  
FUTA wages), determined without regard to the $7,000  
FUTA wage limitation. Section 3306(b) generally defines  
wages as all remuneration for employment, as defined by  
section 3306(c), subject to certain limitations. However,  
for this purpose, the term “wages” doesn’t include any  
amount taken into account for purposes of determining:  
Any other general business credit;  
For wages paid before July 1, 2021, any employee  
retention credit claimed on an employment tax return; or  
For wages paid before October 1, 2021, any credit for  
qualified sick and family leave wages claimed on an  
employment tax return.  
An employment tax return includes the following.  
Form 941, Employer’s QUARTERLY Federal Tax  
Return, and related Forms 941-PR, 941-SS, and 941-X.  
Form 943, Employer’s Annual Federal Tax Return for  
Agricultural Employees, and related Forms 943-PR and  
943-X.  
Form 944, Employer’s ANNUAL Federal Tax Return,  
and related Forms 944(SP) and 944-X.  
Form CT-1, Employer’s Annual Railroad Retirement  
Tax Return, and related Form CT-1X.  
Schedule H (Form 1040), Household Employment  
Taxes, and related Schedule H-PR (Form 1040-PR).  
For more information about general business credits,  
see the Instructions for Form 3800. For more information  
about coronavirus-related employment credits, see the  
instructions for your employment tax return.  
Example 1. You pay wages to your employee that  
qualify as a research expense for purposes of determining  
the amount of your research credit under section 41(a).  
The research credit under section 41(a) is a general  
business credit allowed under section 38. Some of the  
wages paid to your employee for the performance of  
qualified services under section 41(b) were paid while the  
employee was on family and medical leave. To figure your  
credit, you must exclude from the wages paid while your  
employee was on family and medical leave any wages  
treated as a qualified research expense for purposes of  
determining the amount of your research credit under  
section 41(a).  
Example 2. The employer is tax-exempt under section  
501(a) as an educational organization described in  
section 501(c)(3). Because employment with the  
employer isn’t employment for purposes of FUTA tax,  
wages paid by the employer aren’t FUTA wages. Although  
the employer is exempt from federal income tax, it earns  
unrelated business taxable income from a trade or  
business that isn’t substantially related to the performance  
of the employer’s exempt purpose. The employer  
maintains a written paid leave policy that provides at least  
2 weeks of paid family and medical leave to all qualifying  
employees, including those performing services for the  
unrelated trade or business. The employer would like to  
claim the credit against its unrelated business income tax  
liability. Because the employer doesn’t pay FUTA wages,  
Eligible employer for whom qualifying employees  
perform services. Only an eligible employer for whom  
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Instructions for Form 8994 (December 2021)  
 
qualifying employees perform services can claim the  
credit with respect to wages paid.  
on line 2. For more information, see the instructions for  
line 2.  
Normal hourly wage rate of an employee not paid an  
hourly wage rate. Until further guidance is issued, an  
employer may use any reasonable method to convert the  
normal wages paid to an employee who isn’t paid an  
hourly wage rate to an hourly rate.  
Line C  
Answer “Yes” if you paid family and medical leave to at  
earlier. If you answer “No,” don’t file Form 8994 unless  
you are filing it for a partnership or S corporation that  
received from another entity a credit that must be reported  
on line 2. For more information, see the instructions for  
line 2.  
Aggregation Rules  
Section 45S(c)(3) provides that all persons who are  
treated as a single employer under section 52(a) and (b)  
are treated as a single taxpayer. In accordance with this  
aggregation rule, employers are aggregated for purposes  
of section 45S(h)(1), which provides that a taxpayer may  
elect to have section 45S not apply for any tax year.  
Consequently, employers aren’t aggregated for any other  
purpose, including figuring the credit.  
Line D  
Answer “Yes” if you either (1) did not employ any  
employees who weren’t covered by the FMLA, or (2)  
employed at least one employee who wasn't covered by  
the FMLA and you included in your written policy and  
otherwise complied with “non-interference” language. See  
Non-interference language under Eligible Employer,  
earlier. If you answer “No,” don’t file Form 8994 unless  
you are filing it for a partnership or S corporation that  
received from another entity a credit that must be reported  
on line 2. For more information, see the instructions for  
line 2.  
Members of Controlled Groups or  
Businesses Under Common Control  
Each member of a controlled group of corporations and  
each member of a group of businesses under common  
control generally makes a separate election to claim or not  
to claim the credit in accordance with rules set forth under  
section 51(j)(2) and (3). However, in the case of a  
consolidated group (as defined in Regulations section  
1.1502-1(h)), the election is made by the agent (as  
defined in Regulations section 1.1502-77) of the group.  
An election to claim or not to claim the credit is made for  
the tax year in which the credit is available by claiming or  
not claiming the credit on either an original return or an  
amended return filed for that tax year.  
Line 1  
Use the Paid Family and Medical Leave Credit Worksheet  
to figure any credit amount to enter on line 1.  
In general, you must reduce your deduction for salaries  
and wages by the amount on line 1. You must make this  
reduction even if you can’t take the full credit this year and  
must carry it back or forward. If you capitalized any costs  
on which you figured the credit, reduce the amount  
capitalized by the credit attributable to these costs.  
More Information  
For more information about this credit, see the following.  
Line 2  
Section 45S.  
Notice 2018-71, 2018-41 I.R.B. 548, available at  
Enter total paid family and medical leave credits from:  
Schedule K-1 (Form 1065), Partner’s Share of Income,  
Deductions, Credits, etc., box 15 (code P); or  
Schedule K-1 (Form 1120-S), Shareholder’s Share of  
Specific Instructions  
Line A  
Income, Deductions, Credits, etc., box 13 (code P).  
Partnerships and S corporations report the above  
credits on line 2. All other filers figuring a separate credit  
on line 1 also report the above credits on line 2. All others  
not using line 1 to figure a separate credit must report the  
above credits directly on Form 3800, Part III, line 4j.  
Answer “Yes” if you have a written policy providing at least  
2 weeks of annual paid family and medical leave for all of  
your qualifying employee(s) to whom wages are paid  
(prorated for any part-time employees). See Minimum  
earlier. If you answer “No,” don’t file Form 8994 unless  
you are filing it for a partnership or S corporation that  
received from another entity a credit that must be reported  
on line 2. For more information, see the instructions for  
line 2.  
Line B  
Answer “Yes” if the written policy provides paid family and  
medical leave of at least 50% of the wages normally paid  
to each qualifying employee. See Family and Medical  
earlier. If you answer “No,” don’t file Form 8994 unless  
you are filing it for a partnership or S corporation that  
received from another entity a credit that must be reported  
Instructions for Form 8994 (December 2021)  
-7-  
Keep for Your Records  
Paid Family and Medical Leave Credit Worksheet  
You may use this worksheet to figure your credit for certain wages paid during your tax year to any qualifying  
employee(s) while the employee is on family and medical leave. If you need more rows, use a separate sheet and  
include the additional amounts in the totals below.  
(a)  
Qualifying  
Employee  
(b)  
(c)  
(d)  
Paid Family and  
Medical Leave  
Applicable Percentage  
Credit Amount  
(shown as a decimal (25% = 0.25)) (multiply column (b) by column (c))  
1.  
2.  
3.  
4.  
5.  
6.  
7.  
8.  
9.  
10.  
11.  
12.  
13.  
14.  
15.  
16.  
17.  
18.  
19.  
20.  
21.  
22.  
23.  
24.  
25.  
26.  
27.  
28.  
29.  
30.  
Total amount shown in column (d) from all sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
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Instructions for Form 8994 (December 2021)  
which the rate of payment exceeds 50%, up to a  
maximum applicable percentage of 25%. See Applicable  
Percentage, earlier, for examples. You can use the  
following Applicable Percentage Worksheet to figure the  
applicable percentage(s) to enter in column (c).  
Instructions for Paid Family and  
Medical Leave Credit Worksheet  
Although you only need to provide summary  
information to claim the credit, keep separate  
records that include the necessary information to  
TIP  
Applicable Percentage Worksheet  
support the amount of credit you are claiming. The Paid  
Family and Medical Leave Credit Worksheet is one  
method of reflecting the necessary information and is  
provided to assist you in this process. You should retain  
this worksheet (or any other document you use for  
capturing this information) in your records. The  
information needed to support the amount of credit you  
are claiming includes the:  
1. Enter the percentage required  
under your written policy for the  
payment of family and medical  
leave* . . . . . . . . . . . . . . . .  
1.  
2.  
%
%
2. Minimum percentage required  
to claim the credit . . . . . . . .  
50  
3. Subtract line 2 from line 1. If the  
result is less than zero, stop  
here, skip lines 4 and 5, and  
enter -0- on line 6 . . . . . . . .  
Name and social security number of each qualifying  
employee,  
Wages paid to each qualifying employee,  
3.  
%
Name and employer identification number of each  
qualifying employer,  
4. Multiply the number (percentage  
points) on line 3 by 0.25  
Applicable percentage, and  
Family and medical leave policy.  
percentage points. For example,  
if line 3 is 25%, then 25 × 0.25 =  
6.25 percentage points or  
Column (a), Qualifying Employees  
6.25% . . . . . . . . . . . . . . . .  
4.  
5.  
%
%
Enter the name or other identifying information for each  
qualifying employee to whom wages were paid while on  
family and medical leave. See Qualifying Employee and  
5. Base applicable  
12.5  
percentage . . . . . . . . . . . . .  
6. Add lines 4 and 5. Enter this  
applicable percentage shown as  
a decimal (for example, 18.75%  
would be shown as 0.1875) in  
column (c) of the Paid Family  
and Medical Leave Credit  
Column (b), Paid Family and Medical Leave  
Enter the total family and medical leave wages paid during  
the tax year for each employee listed in column (a). See  
Requirement, earlier.  
Worksheet for all qualified  
employees to whom the rate of  
payment shown on line 1  
Column (c), Applicable Percentage  
The applicable percentage is based on the rate of  
applies . . . . . . . . . . . . . . . .  
6.  
%
payment for the leave under the employer’s policy. The  
base applicable percentage of 12.5% applies if the rate of  
payment is 50%. If the rate of payment under the policy is  
greater than 50%, the applicable percentage is increased  
by 0.25 percentage points for each percentage point by  
*Complete a separate worksheet for each separate  
percentage required and used under your written policy for  
the payment of family and medical leave.  
Instructions for Form 8994 (December 2021)  
-9-  
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the  
United States. You are required to give us the information. We need it to ensure that you are complying with these laws  
and to allow us to figure and collect the right amount of tax.  
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act  
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be  
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax  
returns and return information are confidential, as required by section 6103.  
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden  
for individual and business taxpayers filing this form is approved under OMB control numbers 1545-0074 and 1545-0123  
and is included in the estimates shown in the instructions for their individual and business income tax returns. The  
estimated burden for all other taxpayers who file this form is shown below.  
Recordkeeping  
Preparing and sending the form to the IRS  
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1 hr., 54 min.  
1 min.  
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler,  
we would be happy to hear from you. See the instructions for the tax return with which this form is filed.  
-10-  
Instructions for Form 8994 (December 2021)