This information was accurate as of 7/24/20.
In Notice 2020-54, the IRS recently provided guidance to employers on Form W-2 reporting of qualified sick leave wages and qualified family leave wages. These are the wages paid to employees under the Families First Coronavirus Response Act.
The guidance requires employers to report the amount of qualified sick leave wages and qualified family leave wages paid to those employees. Doing so enables self-employed individuals who also receive wages or compensation as employees with the information they need to properly claim any qualified sick leave equivalent or qualified family leave equivalent credits for which they’re eligible.
Although the purpose of the guidance is to furnish information to self-employed individuals who also receive compensation as employees, its requirements apply to all employers — whether or not they employ such self-employed individuals.
Qualified Sick Leave Wages
In addition to reporting qualified sick leave wages in the amount of wages paid to an employee, employers must report on Form W-2:
1. The total amount of qualified sick leave wages paid for reasons described under the Emergency Paid Sick Leave Act. In labeling this amount, the employer must use the following or similar language: “Sick leave wages subject to the $511 per day limit.”
2. The total amount of qualified sick leave wages paid for reasons described under the Emergency Paid Sick Leave Act. In labeling this amount, the employer must use the following or similar language: “Sick leave wages subject to the $200 per day limit.”
If a separate statement is provided and the employee receives a paper Form W-2, the statement must be included with the Form W-2 provided to the employee. If the employee receives an electronic Form W-2, the statement must be provided in the same manner and at the same time as Form W-2.
Qualified Family Leave Wages
In addition to providing qualified family leave wages in the amount of wages paid to an employee on Form W-2, employers must separately report to the employee the total amount of qualified family leave wages paid to the employee under the Emergency Family and Medical Leave Expansion Act. In labeling this amount, the employer must use the following or similar language: “Emergency family leave wages.”
If a separate statement is provided and the employee receives a paper Form W-2, the statement must be included with the Form W-2 sent to the employee. If the employee receives an electronic Form W-2, the statement must be provided in the same manner and at the same time as Form W-2.
Additional Explanation
On Form W-2, or in a separate statement sent to the employee, the employer may provide additional information about qualified sick leave wages and qualified family leave wages. This information can explain that these wages could limit the amount of the qualified sick leave equivalent or qualified family leave equivalent credits to which the employee may be entitled with respect to any self-employment income. Contact us for further information.
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