On July 8, 2020, the Internal Revenue Service (IRS) and the U.S. Treasury Department issued Notice 2020-54, requiring employers to report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA). Employers will be required to report these amounts either on Form W-2 or on a separate statement included with the W-2.
This required reporting provides employees who are also self-employed with information needed to properly claim a qualified sick leave equivalent or qualified family leave equivalent credits under the Families First Act.
Self-employed individuals claiming these qualified credits must do so on Form 7202 — Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, included with their income tax returns.
FFCRA requires employers with fewer than 500 employees to provide paid leave due to certain circumstances related to COVID-19 through two separate provisions: The Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act (FMLA).
Employers may take a dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under FFCRA.
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