The IRS issued guidance to employers on reporting the amount of qualified sick and family leave wages paid to employees on Form W-2 for leave taken in 2021. The notice provides guidance under the recent legislation including the Families First Coronavirus Response Act, as amended by the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021. The credit for qualified sick and family leave wages is a refundable tax credit to employers with fewer than 500 employees to reimburse them for the cost of providing qualified leave wages and is currently extended through September 30, 2021.
The employer must include qualified leave wages in the amount of wages paid reported in Box 1, Box 3 (up to the social security wage base), and Box 5 of Form W-2. Eligible employers have separate reporting requirements for leave provided to employees during the period beginning January 1, 2021 through March 31, 2021 under the Families First Act and leave provided to employees during the period beginning April 1, 2021 through September 30, 2021 under the American Rescue Plan Act of 2021. The employer must separately report the following in Box 14 of Form W-2 or on a separate statement provided with the Form W-2:
- the total amount of sick leave wages subject to the $511 per day limit;
- the total amount of sick leave wages subject to the $200 per day limit; and
- the total amount of emergency family leave wages.
The guidance provides employers with model language to use as part of the instructions for employee for the Form W-2 or on the separate statement provided with the Form W-2. Additionally, the wage amount that the notice requires employers to report on Form W-2 provides employees who are also self-employed with the information necessary to determine the amount of any sick and family leave equivalent credits they may claim in their self-employed capacities. Call the Crosslin tax team at (615) 320-5500 with any questions. We are here to help!