IRS: New reason Form W-2c may be needed for TY ‘20, ‘21

Your Payroll team may need to give employees an amended W-2 for tax years 2020 and/or 2021 depending on what you reported in box 14.

Remember, wages paid for Families First Coronavirus Response Act (FFCRA) and American Rescue Plan Act (ARPA) leave had to be reported in box 14 of Forms W-2.

Alternatively, Payroll could give employees a separate statement containing the information.

Currently, some employers are claiming tax credits for sick leave or family leave wages paid after Dec. 31, 2021. Specifically, the credits are for:

• FFCRA leave taken after March 31, 2020, and before April 1, 2021, and
• ARPA leave taken after March 31, 2021, and before Oct. 1, 2021.

As indicated in facts sheets 2022-15 and 2022-16, issue a 2020 W-2c to an employee if adding leave wages taken in 2020 and paid after 2021.

Likewise, issue a 2021 W-2c to an employee if adding leave wages taken in 2021 and paid after 2021.

Note: You don’t need to file Form W-2c with SSA if you’re only correcting an amount in box 14.

Model language for Form W-2c

As you’re preparing a Form W-2c, remember IRS had previously provided model language for reporting sick leave or family leave wages in box 14. First, on July 8, 2020, Notice 2020-54 contained optional wording on the three types of wages employers had to report for TY 2020:

• “Sick leave wages subject to the $511 per day limit because of care you required.”
• “Sick leave wages subject to the $200 per day limit because of care you provided to another.”
• “Emergency family leave wages.”

Then, on Sept. 7, 2021, IRS issued TY 2021 guidance in Notice 2021-53. That notice laid out six types of wages. Specifically, Payroll would go through the previous list and insert:

• “paid for leave taken after Dec. 31, 2020, and before April 1, 2021” (FFCRA leave), and then go back through the list and insert
• “paid for leave taken after March 31, 2021, and before Oct. 1, 2021” (APRA leave).