COVID-19 and the W-2

Posted by

By Laura Detsch

Compliance Officer

2020 will certainly be a year to remember.  COVID-19 has created many IRS reporting challenges for those opting to receive the credits provided by the federal government.   The latest change is the requirement to report any information regarding the qualified paid sick and emergency family leave that will need to be added to box 14 of the W-2 for those applicable employees.  The option to use box 14 is a separate statement that provides the detailed information for the qualified paid sick and emergency family leave under the FFCRA. You can find the details in the publication Notice 2020-54. The reporting requirements are explained in Part III of IRS Notice 2020-54.

For box 14 of the W-2, the qualified paid sick leave will use the tag identified by the IRS as EPSLA. The qualified paid family leave wages will be identified with the tag EFMLEA.  If using the separate statement, it would be prudent to add in some instructions regarding the provided information.  The referenced notice provides a suggestion on page 8-9.

In addition to reporting these amounts in box 14, the identified amounts will also be included in boxes 1 – Wages, tips, other compensation; 3 – Social security wages; and 5 – Medicare wages and tips. Or if you are reporting RRTA income, the qualifying paid sick and family leave will be included in Box 1 – Wages, tips, other compensation and listed separately in box 14 with corresponding identifying tags provided in the IRS Notice 2020-54.

Remember when reporting these qualifying wages in box 14 (and boxes 1, 3, and 5) that they are capped at the correct limits, which are, depending upon the circumstance of the qualifying payment $5,110; $2,000; or $12,000.

The employee retention credit is NOT required to be reported in box 14 of the W-2, but should be included in boxes 1, 3, and 5.

For those of you who have not been tracking this information per employee, we can provide an excel worksheet to assist you with this; click here to download.  This worksheet can also be utilized as supporting documentation for the amounts listed on the quarterly 941 forms.  At this time, there is no requirement for this information to be included in the efile submitted to the SSA/BSO.

If you chose to create your own supporting documentation/spreadsheet keep in mind the following:

  • Track the qualifying paid sick leave separate from the qualifying paid family leave and separate from the employee retention credit.  They are broken out on the 941 and W-2.
  • Track the total of the sick leave, family leave, and employee retention by the quarter to support your 941 reports.
  • If using as supporting documentation for the employee retention credit, for Q2 track the period March 13th – March 31th separate from April 1st – June 30th.
  • Track per employee for the W-2 information.
  • Use a YTD amount to track the limits/year/employee.
  • Will you remember how you got your totals that were reported to the IRS in the future if you need to?

COVID-19 has changed how we approach W-2s. Want to learn more about how we can help? Contact us today.