Under the Families First Coronavirus Response Act (FFCRA), businesses with fewer than 500 employees must give eligible employees paid sick and family leave. Because these wages are taxable to the employee, they must be reported on the employee’s Form W-2 or separate attached statement in accordance with IRS guidelines.
IRS Notice 2020-54 (https://www.irs.gov/pub/irs-drop/n-20-54.pdf) provides guidance to employers who will now have to complete a new line item on their employees’ 2020 Form W-2 if they have provided sick and/or family leave due to Covid-19.
Employers must include FFCRA leave wages paid between April 1, 2020 and December 31, 2020.
Three (3) types of paid sick or family leave wages are required to be separately reported either in Box 14 of Form W-2 or on a separate statement included with Form W-2.
Sick Leave Wages because of care the employee required. In labeling or describing this amount the employer must use the following or similar language: “sick leave wages subject to the $511 per day limit”.
Sick Leave Wages subject to the $200 per day limit because of care the employee provided to others must be reported and labeled “sick leave subject to $200 per day limit” or the employer must use similar descriptive language.
Qualified Family Leave Wages up to $200 per day must also be separately reported. The employer must label this amount “emergency family leave wages” or use similar language.
Note: Information and government guidance with respect to the Families First Coronavirus Response Act (FFCRA) is changing frequently. The information and Guidance above is current and correct as of October 27, 2020, but is subject to revision.