Reporting Covid Sick Leave

Updated 10/21/2021

As of 9/30/2021 the government is no longer providing a credit for paying an employee while they are ill with Covid or taking care of someone with Covid.

Updated 1/13/2021

As of 12/31/2020 the mandate that required employers to provide COVID-19 related leave expired. It is now a voluntary and employers can still receive credit through March 31, 2021. Read more here.

Have any of your employees taken COVID-19 sick leave? If so reporting Covid-19 sick leave on W-2s is something you need to be aware of this year. In Notice 2020-54, the IRS explains how employers must report qualified leave given under the Families First Coronavirus Response Act (FFCRA).

For FFCRA reporting purposes, qualified leave refers to emergency sick leave and expanded family leave paid to employees between April 1, 2020, and Dec. 31, 2020.

General reporting criteria

Employers must report FFCRA-qualified leave in Box 14 of the recipient’s 2020 Form W-2 or on a separate statement. Regardless of which method you choose, you must state the type of FFCRA leave that the employee took and the amount of wages they received for the leave.

For leave pertaining to the FFCRA’s Emergency Paid Sick Leave Act (EPSLA), the IRS says you can use the following, or similar, language:

Sick leave wages subject to the $511 per day limit (because of care the employee required).
Sick leave wages subject to the $200 per day limit (because of care the employee provided to another).

For leave pertaining to the FFCRA’s Emergency Family and Medical Leave Expansion Act (EFMLEA), the IRS says you can simply describe it as:

Emergency family leave wages.

Whether the leave relates to the EPSLA or the EFMLEA, don’t forget to state the amount of qualified leave actually paid to the employee.

Providing additional information to employees

You can provide employees with additional information on the FFCRA leave reported in Box 14 of their W-2 or in the separate statement. You’re not required to give this additional information, but you can if you want to.

When providing additional information, you may follow the “model language” offered in Notice 2020-54. Just remember to modify the notice’s language as necessary.

You may also use the notice’s “model language” to explain what employees should do if they also have self-employment income and intend to claim equivalent credits for qualified sick or family leave.

Separate statements

If you report FFCRA leave in a separate statement and will be giving the employee a paper W-2, you must include the separate statement with the paper W-2.

However, if you will be issuing the W-2 electronically, you must deliver the separate statement at the same time and in the same manner as the electronic W-2.

Reporting Social Security and Medicare wages

FFCRA-qualified leave wages are subject to normal tax withholding — including for federal income tax, Medicare tax and Social Security tax — and must therefore be included in Box 1, Box 3 and Box 5 of the employee’s Form W-2.

Deadline for reporting and distributing 2020 Form W-2s

Employers have until Feb. 1, 2021, to file 2020 Form W-2s with the Social Security Administration to give employees their copies of the form.

See Notice 2020-54 or contact your financial professional for more information on how to report FFCRA-qualified leave.

Benefits of working with a PEO

If you are working with a PEO, like Atlantic Payroll Partners this isn’t something that you’ll need to worry about. We handle your payroll and W-2 filings. However, it is important that you report to us any leave that relates to COVID-19. Doing so will allow us to accurately send out 2020 W-2s.

Check out our eBook, The Cost of Working with a PEO