How to Report Your Employees’ Paid Leave Amounts Under FFCRA
July 27, 2020
The Internal Revenue Service (IRS) recently issued Notice 2020-54 detailing how employers must report the amount of emergency sick leave wages as well as expanded family leave wages paid to their employees under the Families First Coronavirus Response Act (FFCRA) within the time period of Apr. 1, 2020 and Dec. 31, 2020. DM Payroll Solutions sheds light on how you should plan to report your employees’ leave wages as well as other details this new notice contains.
Paid Leave Overview
When creating your report, it’s important to consider the criteria for paid sick leave and paid family leave. Here’s a brief overview to ensure you’re familiar with the different leave circumstances:
Paid Sick Leave
Employees must be provided up to 80 hours of paid sick leave benefits if they:
- Have been ordered to self-quarantine due to COVID-19 by a federal, state or local authority.
- Have been advised by a healthcare professional to self-quarantine due to COVID-19.
- Are exhibiting COVID-19 symptoms and awaiting a medical diagnosis.
- Are caring for an individual who has been ordered to self-quarantine, whether by the government or a healthcare professional.
- Need to care for a child whose school or childcare service has been shut down due to COVID-19.
- Are experiencing similar conditions as specified by the Secretary of Health and Human Services (HHS), in consultation with the Secretaries of Labor and Treasury.
Employees taking leave reasons 1, 2 or 3 must be paid at minimum wage or at their regular pay rate, whichever is greater. Employees taking leave for reasons 4, 5 or 6 must be compensated at two-thirds of their usual pay rate or minimum wage, whichever is greater. Part-time employees can take the number of hours they would typically work during a two-week period. Paid sick leave is capped at $511 per day ($5,110 maximum) for an employee’s own care and $200 per day ($2,000 maximum) if the employee is caring for someone else, according to FFCRA.
Paid Family Leave
The FFCRA also offers up to 12 weeks of paid leave to parents who are unable to work due to the closing of their children’s schools or childcare programs. Employees may take unpaid leave for the first 10 days or substitute any accrued vacation or PTO time according to their employer’s policy. For the following ten weeks, employees must be paid no less than two-thirds of their regular pay rate for normally scheduled hours. Employees’ paid family leave is capped at $200 per day ($10,000 maximum).
Reporting Leave Amounts
Employers must report the qualified leave amounts on Form W-2, Box 14 or a separate statement. On top of including qualified leave wages in the wages paid to employees reported in form W-2 Boxes 1, 3 and 5, employers are required to separately state the total amount of qualified leave wages paid for sick leave reasons 1-3, sick leave reasons 4-6 and expanded family leave. In the case of Box 14 or a separate statement, refer to reasons 1-3 as “sick leave wages subject to the $511 per day limit”, reasons 4-6 as “sick leave wages subject to the $200 per day limit” and total family leave wages as “emergency family leave wages”.
If you plan to use a separate statement when reporting wages and your employee receives a paper Form W-2, note that the statement has to be included with the employee’s Form W-2. If your employee receives an electronic Form W-2, the statement should be delivered in the same format and at the same time.
Further Guidance
The notice also provides sample language to be used when reporting the paid leave. Reporting with Box 14 or a separate statement have additional requirements on top of the requirements in which to report wages in Boxes 1, 3 and 5. Additionally, the notice’s requirements provide guidance for self-employed individuals, allowing them to claim qualified sick leave equivalent or qualified family leave equivalent credits.
When it comes to reporting your business’s qualified paid leave amounts, trust DM Payroll Solutions’ reporting capabilities to simplify the process and accurately get the job done automatically for you. Contact us today to learn more.