IRS Guidance on Reporting Qualified Wages under the Families First Coronavirus Response Act (FFCRA)

Toward the beginning of the COVID-19 pandemic in March, the Families First Coronavirus Response Act (FFCRA) was enacted, requiring certain public employers and private employers with fewer than 500 employees to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. We have reviewed the eligibility parameters and qualified reasons for leave in a previous post; these provisions will apply through December 31, 2020.

When paying wages during qualified FFCRA leave, eligible employers are entitled to receive a tax credit against their amount due under IRS Code 3111 – Old-Age, Survivors & Disability Insurance tax. Qualified leave wages, plus allocable qualified health plan expenses and the employer’s share of Medicare taxes are all included in the calculation for credit when supported by proper documentation. Now, the U.S Department of the Treasury Department and Internal Revenue Service (IRS) have released guidance on how to account for these same wages on the employee’s annual Form W-2.

Notice 2020-54, released in July, requires that employers report the amount of qualified sick and family leave wages paid to employees under the FFCRA either on 2020 Form W-2, Box 14, or in a statement provided with the Form W-2; there is optional language to support the statement included in the guidance. This required reporting would apply to all eligible wages paid under the FFCRA; whether the leave was for oneself, a family member, or in the case of school/care provider closing. The intent is to provide employees with a record of the leave, and for those who are also self-employed, the necessary information to properly claim any FFCRA sick or family leave credits. 

If you have any questions about this topic, please contact the Rose & Kiernan, Inc. Employee Benefits Management Group (EBMG) here or by calling (800) 242-4433.

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