IRS Provides Guidance on W-2 Reporting of FFCRA Paid Sick Leave and Expanded FMLA Leave, July 30, 2020

The Families First Coronavirus Response Act (FFCRA) requires smaller employers (under 500 employees) to provide paid sick leave and expanded FMLA leave for COVID-19-related reasons. IRS guidance requires W reporting of those payments that provides important clarity for self-employed taxpayers. Self-employed taxpayers can claim a tax credit for FFCRA sick leave amounts. If they receive any FFCRA pay as an employee, they must reduce their credit amount by the amount paid by the employee. Because of this, employers are required to separately state the paid leave portion of employee compensation on their Form W, in Box 14. The employer can also report the FFCRA pay on a separate statement included with the employee's W for 2020. If the W is provided electronically, the separate statement must be provided in the same manner and at the same time. For more information, visit Tax Facts Online.