IRS Releases Guidance on W-2 Reporting of COVID-19 Related Paid Sick and Family Leave Wages

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Family Leave and Paid Sick Wages Reporting

On July 9, 2020, the IRS released guidance requiring employers to report employee qualified paid sick and family leave wages provided under the Families First Coronavirus Response Act (FFCRA).

View the new IRS guidance here.

Guidance Explained

The intent of the employer reporting requirement under the notice is to provide self-employed individuals who are also employees with the information necessary to determine the amount of any sick and family leave equivalent credits they may claim in their self-employed capacities.

Employers will be required to report these amounts either on Form W-2, Box 14, or in a statement provided with the Form W-2 for all employees. Please note that if the employer chooses to provide the required information in a statement separate from the W-2, such statement must be included in the same manner (paper vs. electronic) and time as the W-2.

In addition to required reporting information, the guidance provides employers with optional model language to use in the Form W-2 instructions for employees. This language is intended to assist employees with self-employment income, in addition to wages paid by an employer. Understand that such wages may limit the amount of equivalent credits the employee may claim on their tax return.

For more information on the specific reporting requirements provided in the notice, please contact your tax advisor or payroll vendor.

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