The Internal Revenue Service (IRS) released Notice 2020-54, a guidance on reporting qualified sick leave wages and qualified family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA).
According to the document, employers with fewer than 500 employees will be required to report the amounts paid to employees under the FFCRA either on Form W-2, Box 14, or on a separate statement. The guidance also provides employers with optional language to use in the Form W-2 instructions for employees.
FFCRA generally requires employers with fewer than 500 employees to provide their employees with paid leave because of certain COVID-19-related circumstances. Employers are entitled to receive a refundable tax credit equal to the amount of qualified wages, including employer-paid health plan expenses, paid under this temporary mandate.
The IRS also published a two-page document on the FFCRA medical and sick leave tax credits available to employers. The Employee Retention Credit, designed to encourage employees to keep employees on their payroll, is 50% of up to $10,000 in qualified wages paid to an employee by an employer experiencing economic hardship related to the coronavirus.