W2 Reporting: IRS Guidance Issued Related to Payments Made Under FFCRA

Looking into the near future, the Internal Revenue Service (IRS) recently released guidance, Notice 2020-54, on the reporting of qualified sick leave wages and qualified family leave wages related to the Families First Coronavirus Response Act (FFCRA).

The guidance states that these wages should be reported on Form W-2 Box 14 for employees.  As a reminder, employers receive a refundable tax credit under Section 7001(b) and Section 7003(b) of the FFCRA qualified sick leave wages paid to an employee not to exceed the thresholds mandated in the Act. This reporting also provides employees who are also self-employed the information necessary to claim credits under FFCRA when they file their taxes (see Sections 7002(a) and 7004(a) of the FFCRA).

The model language that can be used in Form W-2 instructions for employees is available in the guidance shown below:

“Included in Box 14, if applicable, are amounts paid to you as qualified sick leave wages or qualified family leave wages under the Families First Coronavirus Response Act. Specifically, up to three types of paid qualified sick leave wages or qualified family leave wages are reported in Box 14:

  • Sick leave wages subject to the $511 per day limit because of care you required;
  • Sick leave wages subject to the $200 per day limit because of care you provided to another; and
  • Emergency family leave wages.

If you have self-employment income in addition to wages paid by your employer, and you intend to claim any qualified sick leave or qualified family leave equivalent credits, you must report the qualified sick leave, or qualified family leave wages on Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, included with your income tax return and reduce (but not below zero) any qualified sick leave or qualified family leave equivalent credits by the amount of these qualified leave wages. If you have self-employment income, you should refer to the instructions for your individual income tax return for more information.”

Employers Council recommends you reach out to your company’s tax advisor if you need help navigating this new Form W-2 reporting requirement.