Self-employed individuals
claiming qualified sick leave equivalent or qualified family leave equivalent
credits must then report these qualified sick leave and qualified family
leave wage amounts on Form 7202, Credits for Sick Leave and Family Leave for
Certain Self-Employed Individuals, included with their income tax returns,
and reduce (but not below zero) any qualified sick leave or qualified family
leave equivalent credits by the amount of these qualified leave wages.
Reporting Qualified Sick Leave Wages
In addition to including
qualified sick leave wages in the amount of wages paid to the employee
reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form
W-2 (or, in the case of compensation subject to the Railroad Retirement Tax
Act (RRTA), in the amount of RRTA compensation paid to the employee reported
in Boxes 1 and 14 of Form W-2), employers must report to the employee the
following type and amount of the wages that were paid, with each amount
separately reported either in Box 14 of Form W-2 or on a separate statement:
* the total amount of qualified
sick leave wages paid because of being subject to a Federal, State, or local
quarantine or isolation order related to COVID-19; being advised by a health
care provider to self-quarantine related to COVID-19; or experiencing
COVID-19 symptoms and is seeking a medical diagnosis; in labeling this
amount, the employer must use the following, or similar, language: "sick
leave wages subject to the $511 per day limit;" and
* the total amount of
qualified sick leave wages paid because of caring for an individual subject
to an order described in (1) or self-quarantine as described in (2); is
caring for a child whose school or place of care is closed (or child care
provider is unavailable) for reasons related to COVID-19; or experiencing any
other substantially-similar condition specified by the Secretary of Health
and Human Services, in consultation with the Secretaries of Labor and
Treasury. in labeling this amount, the employer must use the following or
similar language: "sick leave wages subject to the $200 per day
limit."
If a separate statement is
provided and the employee receives a paper Form W-2, then the statement must
be included with the Form W-2 provided to the employee, and if the employee
receives an electronic Form W-2, then the statement will be provided in the
same manner and at the same time as the Form W-2.
Reporting Qualified Family Leave Wages
In addition to including
qualified family leave wages in the amount of wages paid to the employee
reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form
W-2 (or, in the case of compensation subject to RRTA, in the amount of RRTA
compensation paid to the employee reported in Boxes 1 and 14 of Form W-2),
employers must separately report to the employee the total amount of qualified
family leave wages paid to the employee either in Box 14 of Form W-2 or on a
separate statement. In labeling this amount, the employer must use the
following, or similar, language: "emergency family leave wages."
If a separate statement is
provided and the employee receives a paper Form W-2, then the statement must
be included with the Form W-2 sent to the employee, and if the employee
receives an electronic Form W-2, then the statement shall be provided in the
same manner and at the same time as the Form W-2.
Model Language for Employee Instructions
As part of the
Instructions for Employee, under the instructions for Box 14, for the Forms
W-2, or in a separate statement sent to the employee, the employer may
provide additional information about qualified sick leave wages and qualified
family leave wages and explain that these wages may limit the amount of the
qualified sick leave equivalent or qualified family leave equivalent credits
to which the employee may be entitled with respect to any self-employment
income.
The following model
language (modified as necessary) may be used:
"Included in Box 14,
if applicable, are amounts paid to you as qualified sick leave wages or
qualified family leave wages under the Families First Coronavirus Response
Act. Specifically, up to three types of paid qualified sick leave wages or
qualified family leave wages are reported in Box 14:
* Sick leave wages subject
to the $511 per day limit because of care you required;
* Sick leave wages subject
to the $200 per day limit because of care you provided to another; and
* Emergency family leave
wages.
If you have
self-employment income in addition to wages paid by your employer, and you
intend to claim any qualified sick leave or qualified family leave equivalent
credits, you must report the qualified sick leave or qualified family leave
wages on Form 7202, Credits for Sick Leave and Family Leave for Certain
Self-Employed Individuals, included with your income tax return and reduce
(but not below zero) any qualified sick leave or qualified family leave
equivalent credits by the amount of these qualified leave wages. If you have
self-employment income, you should refer to the instructions for your
individual income tax return for more information."
For a copy of IRS Notice
2020-54, click on the link below: