New IRS guidance on W-2 reporting for coronavirus leave

Did your company pay employees emergency sick or medical leave wages under the Families First Coronavirus Response Act (FFCRA)? You have new guidance for reporting coronavirus leave on W-2s.

IRS just issued Notice 2020-54 detailing how employers must report those wages on employees’ W-2s come year-end.

Of course, any direction is most welcome with this uncharted territory, especially for your Payroll team.

2 ways to report wages paid

Your company has two options to report these FFCRA wages paid between April 1 and Dec. 31, 2020:

• Use Box 14 of the W-2, or
• Issue a separate statement, which must be included with the employee’s W-2, even if you provide them electronically.

The notice also contains optional language you can use to instruct employees to provide additional info about qualified leave wages for your W-2 reporting for coronavirus.

Coronavirus act leave requirements

You’ll remember, under the FFCRA, employers with fewer than 500 employees must provide full-time employees with 10 days (80 hours) of paid sick leave for specific circumstances related to COVID-19. That includes: 

• Responding to quarantine requirements or recommendations
• Experiencing COVID-19 symptoms and seeking medical diagnosis
• Caring for family members who are responding to quarantine requirements or recommendations, and
• Caring for children whose school or daycare is closed, or whose childcare provider is not otherwise available, due to COVID-19. 

As far as FMLA leave for caregivers, the law said employers with fewer than 500 employees will provide 12 weeks of potentially job-protected paid FMLA leave.

During the first 10 days of this leave, your employees may use accrued personal or sick leave (including Emergency Paid Sick Leave), but you cannot require employees to do so.

Year-end will be here before we know it – it’s worth your team making a plan now so you’re ready this fall.