How to report coronavirus paid sick leave and family leave to employees

By Sally P. Schreiber, J.D.

On Thursday, the IRS explained how employers should report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act, P.L. 116-127 (Notice 2020-54).

The Families First Act, enacted 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. Eligible employers will be able to claim credits based on qualifying leave they provide between April 1, 2020, and Dec. 31, 2020.

Employers will be required to report payments to employees either on box 14 of Form W-2, Wage and Tax Statement, or in a separate statement. The guidance provides employers with language to use on the Form W-2 or in the statement to employees.

Employers must 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.

This reporting provides employees who are also self-employed with information necessary for properly claiming qualified sick leave equivalent or qualified family leave equivalent credits under the Families First Act.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA's coronavirus resources page.

For tax-related resources, visit the AICPA's COVID-19: Tax resources page.

 Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.

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