How Employers Need to Report Qualified Sick Leave and Family Leave Wages

covid-19The IRS released guidance for employers on reporting the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act. The Families First Coronavirus Response Act requires certain employers with less than 500 employees to provide paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.

Qualified Sick Leave Wages

Employers must report to the employee the type and amount of the wages that were paid. Each amount should be reported separately, either in Box 14 of Form W-2 or on a separate statement that is included with the Form W-2.

  • The total amount of qualified sick leave wages paid for reasons described in paragraphs (1), (2), or (3) of section 5102(a) of the Emergency Paid Sick Leave Act (EPSLA). In labeling this amount, the employer must use the following, or similar, language: “sick leave wages subject to the $511 per day limit;” and
  • the total amount of qualified sick leave wages paid for reasons described in paragraphs (4), (5), or (6) of section 5102(a) of the EPSLA. In labeling this amount, the employer must use the following or similar language: “sick leave wages subject to the $200 per day limit.”

This is in addition to including qualified sick leave wages in the amount of wages paid to the employee reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form W-2 (or, in the case of compensation subject to the Railroad Retirement Tax Act (RRTA), in the amount of RRTA compensation paid to the employee reported in Boxes 1 and 14 of Form W-2).

Qualified Family Leave Wages

Employers must separately report to the employee the total amount of qualified family leave wages paid to the employee under the Emergency Family and Medical Leave Expansion Act (EFMLEA) either in Box 14 of Form W-2 or on a separate statement that is included with the Form W-2. The employer must use the following label, or similar, language: “emergency family leave wages”.

This is in addition to including qualified family leave wages in the amount of wages paid to the employee reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form W-2 (or, in the case of compensation subject to RRTA, in the amount of RRTA compensation paid to the employee reported in Boxes 1 and 14 of Form W-2).

Self-Employed Individuals

Self-employed individuals claiming qualified sick leave or qualified family leave credits need to report the qualified sick leave and qualified family leave wage amounts on Form 7202 (Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals) included with their income tax returns, and reduce (not below zero) any qualified sick leave or qualified family leave equivalent credits by the amount of the qualified leave wages.

Read IRS Notice 2020-54 here.

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