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IRS Issues Guidelines On How To Report Coronavirus Paid Sick Leave, Family Leave

Late last week, the IRS issued guidance to employers  on how to report coronavirus paid leave and family leave for wages paid to employees under the Families First Coronavirus Response Act.

The Families First Act, which we first covered March 16 and was passed March 18, requires employers with fewer than 500 employees to provide paid sick leave or family or medical leave for their employees who miss work for various coronavirus-related reasons. According to the Act, eligible employers will be able to claim credits based on qualifying leave they provide between April 1, 2020, and Dec. 31, 2020.

To properly report coronavirus paid sick leave and family leave, the IRS guidelines state that employers must: 

  • report payments to employees either on box 14 of Form W-2, Wage and Tax Statement, or in a separate statement. Examples of language to use on the Form W-2 or in the statement to employees are provided in the guidance.
  • separately state the total amount of qualified sick leave wages paid because the employee was quarantined or diagnosed with COVID-19, the total amount of qualified sick leave wages paid because the employee was caring for a sick individual or for a child (or for other similar reason), and the total amount of qualified family leave wages paid.

Employees who are also self-employed can also use this guidance to properly claim qualified sick leave equivalent or qualified family leave equivalent credits under the Families First Act.

For more information on navigating your business through the current crisis, including managing PPP loans, please visit our COVID-19 resource center or join us on an upcoming free webinar. Recorded sessions are available on our YouTube channel.