Smart Benefits: IRS Requires W-2 Reporting for FFCRA Leave Pay

Smart Benefits: IRS Requires W-2 Reporting for FFCRA Leave Pay

Since the Families First Coronavirus Relief Act (FFCRA) was signed into law on March 18, 2020, employers across the country have scrambled to implement, fund, and track the act’s paid sick leave and extended family and medical leave provisions. And now there’s a new requirement.

The IRS and Treasury Department recently issued a joint notice requiring employers to report any wages paid out for FFCRA paid leave on the employee’s form W-2. The purpose of this requirement is to effectively document all wages paid out for paid leave and allow employers, including self-employed individuals, to claim tax credits for these wages.

In the notice, the IRS and Treasury Department provide guidance on reporting qualified sick leave wages and qualified family leave wages paid pursuant to FFCRA. According to the notice, employers should report any wages paid to an employee for FFCRA leave on that employee’s form W-2. These wages can be listed in Box 14 (labeled “Other”) or in a separate statement attached to the form W-2.

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Those who are self-employed are also subject to this reporting requirement if they take paid leave under FFCRA. These individuals must report qualified sick leave and qualified family leave wage amounts on Form 7202, included with their income tax return.

The guidance also provides optional model language for employees on how FFCRA leave wages paid may limit the amount of the qualified sick leave equivalent credits to which the employee may be entitled with respect to any self-employment income.

Sam Slade is Managing Director, Employee Benefits, at The Hilb Group of New England, where he delivers consulting and brokerage services to local employers. He has extensive experience in all aspects of employee benefits, including underwriting, plan design, communications, compliance, and analytics, with a particular focus on alternative funding and self-insurance. Sam lives in South Kingstown with his wife and three sons.