IRS Instructs Employers on Reporting COVID Medical & Sick Leave Wages

Disaster Response

The Internal Revenue Service (IRS) has released Notice 2020-54 (PDF), which requires employers to report the amount of qualified sick and family leave wages paid to employees under the Family First Coronavirus Response Act (FFCRA).

FFCRA generally requires employers with fewer than 500 employees to provide their employees with paid leave because of certain COVID-19-related circumstances occurring in 2020. 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.

Employers will be required to report these amounts either on Form W-2, Box 14, or in a statement provided with the Form W-2. The guidance also provides employers with optional language to use in the Form W-2 instructions for employees.

Additional information on the FFCRA medical and sick leave tax credits can be found here.

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