The IRS issued Notice 2020-54 to help employers properly report 2020 emergency paid sick leave and expanded family medical leave wages paid to employees under the Families First Coronavirus Response Act ("FFCRA"). Employers with less than 500 employees who provided benefits under either leave program will need to separately identify and report FFCRA wages on Form W-2 Box 14 based on the reason the leave was taken as follows:
FFCRA provides up to 80 hours of paid sick leave (at the greater of the employee’s regular rate of pay or minimum wage) to employees who are unable to work (or telework) for one of the following COVID-19 reasons:
Employers will identify and report FFCRA sick leave wages on Form W-2 Box 14 (or in a separate statement) as follows:
The FFCRA provides eligible employees up to 12 weeks of expanded family and medical leave who are unable to work (or telework) because the employee is caring for his or her son or daughter whose school or place of care has been closed or whose childcare provider is unavailable due to COVID-19 related reasons. During the first two weeks of unpaid leave, the employee may use FFCRA paid sick leave, at 2/3 of the employee’s regular rate of pay (up to $200 per day), when the employee is unable to work (or telework). After the first two weeks, up to an additional 10 weeks of expanded family and medical leave may be paid at 2/3 of an employee’s regular rate of pay (up to $200 per day), for an employee who has been employed for at least 30 calendar days.
Employers will report expanded family and medical leave wages on Form W-2 Box 14 (or in a separate statement) with a notation such as "emergency family leave wages."
Employers should work closely with their payroll vendor and tax advisor to ensure proper reporting of any wages paid to employees under the FFCRA. If employers will be identifying the FFCRA wages in a separate statement (rather than on Form W-2 Box 14) and the employee receives a paper Form W-2, then the statement must be included with the Form W-2 provided to the employee. If the employee receives an electronic Form W-2, then the statement must be provided in the same manner and at the same time as the Form W-2.
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