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ARCHIVED 2021 W-2 reporting requirements for Covid-19 pay

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Summary

The Treasury Department and the Internal Revenue Service issued Notice 2021-53 which provides guidance to employers about reporting the amount of qualified sick and family leave wages paid to employees for leave taken in 2021 on Form W-2. The notice provides guidance under recent legislation, including: The Families First Coronavirus Response Act (FFCRA), as amended by the COVID-Related Tax Relief Act of 2020, and the American Rescue Plan Act of 2021. Employers will be required to report these amounts to employees either on Form W-2, Box 14, or in a separate statement provided with Form W-2 to the employee. The guidance provides model language to use as part of the Instructions for Employee for the Form W-2 or on the separate statement provided with Form W-2. The wage amount that the notice requires employers to report on Form W-2 will provide 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 (which they must report on Form 7202, Credits for Sick Leave and Family Lave for Certain Self-Employeed Individuals). In July 2020, the IRS issued Notice 2020-54 which provided guidance regarding W-2 reporting of qualified sick leave and family leave under FFCRA for wages paid to employees for leave taken in 2020. Locate additional information about tax relief for employers affected by the Covid-19 pandemic on IRS.gov .

Description

IRS issued guidance for 2021 Covid Wages:

https://www.irs.gov/newsroom/treasury-irs-issue-guidance-for-2021-on-reporting-qualified-sick-and-family-leave-wages

Notice 2021-53:

https://www.irs.gov/pub/irs-drop/n-21-53.pdf

Resolution

CAUTION: Sage Customer Support does not assist with issues related to third-party products or enhancements, hardware, report customizations, state or federal tax-related questions, or specific accounting questions. Please get in touch with your Sage business partner, network administrator, or accountant for assistance. Please refer to our Scope of Support document for details.

The 6 qualified sick and family leave wages to report in box 14 of form W-2 for 2021 are:

  • Emergency Paid Sick Leave $511 Limit before April (511ESLBA)
  • Emergency Family and Medical Leave before April (EFMLEABA)
  • Emergency Paid Sick Leave $200 Limit before April (200ESLBA)
  • Emergency Paid Sick Leave $511 Limit after March (511ESLAM)
  • Emergency Family and Medical Leave after March (EFMLEAAM)
  • Emergency Paid Sick Leave $200 Limit after March (200ESLAM)

Any of these fields needed will have to be added to the W-2 preparer manually.

  1. In the W2/1099 Preparer grid, right-click near the area you want to add a column and select Insert Column.
  2. In the New Column Name enter a name for the sick or family leave wages (use appropriate descriptions listed above such as 511ESLAM) and click OK.
  3. Click the drop-down arrow next to < unassigned > at the top of the column and select Box 14; then select the appropriate paid sick or family medical leave from the drop-down selection.
  4. You can now enter the correct dollar amount in the field.
  5. Repeat these steps for each covid pay you need to report on form W2.


DocLink: What is the process for filing W-2s and W-3s?

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