The Treasury Department and the Internal Revenue Service released guidance in Notice 2020-54 to employers requiring them to report the amount of qualified sick and family leave wages paid to employees under the FFCRA on Form W-2.
Under the notice, covered employers must report the amount of qualified family leave wages paid either in Box 14 of Form W-2 or on a separate statement. The amount must be labeled using the following or similar language “emergency family leave wages.” Covered employers must also separately report the amount of qualified sick leave wages paid to an employee who was subject to a quarantine or isolation order, advised by a healthcare provider to self-quarantine due to COVID-19 concerns, or seeking a diagnosis related to COVID-19 symptoms (those wages being subject to the $511 per day limit) and the amount of qualified sick leave wages paid to care for a family member for such purposes of to care for a child (those wages being subject to the $200 per day limit).
These amounts must be labeled using the following or similar language: “sick leave wages subject to the $511 per day limit” and “sick leaves wages subject to the $200 per day limit,” respectively. Employees who also have self-employment income will then use the information to complete as-yet-unreleased Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. If a separate statement is used, and the employee receives a paper Form W-2, the separate statement must be provided with the Form W-2. Similarly, if the employee receives an electronic Form W-2, the separate statement, if used, must be provided in the same manner and at the same time as the Form W-2.
Covered employers may, but are not required to, provide instructions to the employees regarding the information reported in Box 14 (or on the separate statement). The notice provides model instructions that an employer may use for that purposes. The model instructions explain that the amounts must be reported on Form 7202 if the employee has self-employment income in addition to wages to determine any applicable SECA tax credits.