FFCRA Leave and W-2s: Pay Reporting Requirements

Employers who provided paid leave under the Families First Coronavirus Response Act (FFCRA) are required to report these wages on an employee’s W-2 form, but this requirement has caught some employers off guard.  While the reporting instructions were contained in an IRS notice issued in July, the instructions were not included in the detailed Form W-2 instructions.  For affected employers, here are answers to some of the most frequently asked questions.

Does our company report the FFCRA wages along with regular wages?

FFCRA wages are included in boxes 1, 3 and 5 of Form W-2 and also separately reported in Box 14 or on a separate statement provided at the same time as the regular W-2.  The amount should be labeled with (1) which type of leave was provided (either emergency paid sick leave wages or emergency family leave wages); and (2) the limits on the wages paid per day (either $511 or $200, depending on the reason for the leave).  The IRS has provided specific detailed guidance on the reporting of these wages here.

If our company did not include this pay in our initial W-2s or included it in the wrong location, what should we do?

Employers can issue corrected W-2s including the FFCRA wage data or delineating the FFCRA wage data.  Companies should act quickly to correct the data and issue amended W-2s.  If the W-2s have already been filed with the federal government, employers should take the appropriate steps to issue a W-2C and provide copies to both the Social Security Administration and the employee.

My employees think that FFCRA wages are not taxable—is this correct?

No, FFCRA wages are taxable as regular wages. 

Are FFCRA wages excluded for the purposes of Social Security taxes?

For the employer, FFCRA wages are excluded for Social Security taxes; but for the employee, the wages are included. 

Are FFCRA wages excluded for the purposes of Medicare taxes?

No, FFCRA wages are included for both the employee and the employer shares of Medicare taxes.

For more guidance, contact either your relationship attorney at Honigman, a member of Honigman’s Tax practice group, or a member of Honigman’s Labor and Employment Department.