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IRS: Employers Must Report Pay for FFCRA Leave on W-2

The Internal Revenue Service (IRS) issued new guidance concerning the Families First Coronavirus Response Act (FFCRA) on July 8, 2020. Under this guidance, employers are required to report the amount of qualified sick and family leave wages paid to employees on Form W-2. This requirement was released in Notice 2020-54 of the Internal Revenue Code (IRC) indicating that these wages must be reported in Box 14 of the Form W-2, or in a separate statement included with the W-2.

Per the notice, self-employed individuals, who are also employees, must report on IRS Form 7202 their credits for sick leave and family leave on their tax returns to ensure proper tax treatment. Additionally, Notice 2020-54 provides optional language to use within Form W-2 instructions that explains the details pertaining to the FFCRA leave wages and that an employee’s potential tax credit for FFCRA leave with respect to any additional self-employment income may be limited.

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Contact your Cowden representative for more information on this or other compliance issues.