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Although the federal requirement to
provide leave benefits under the Emer-
gency Paid Sick Leave Act (EPSLA)
and the Emergency Family and Medical
Leave Expansion Act (EFMLEA) did
not apply after Dec. 31, 2020, subse-
quent coronavirus-related legislation
extended the tax credits, first through
March 31, 2021, and later through Sept.
30, 2021, for paid leave that would have
satisfied the EPSLA and EFMLEA
requirements.
Reporting instructions for
boxes 1, 3, and 5
According to Notice 2021-53, FFCRA
qualified leave wages must be reported
in box 1, “Wages, Tips, Other Com-
pensation,” of Form W-2. To the extent
that qualified leave wages are Social
sick leave equivalent or qualified family Security wages or Medicare covered
Employee Benefits leave equivalent credits to which the wages, they must also be included in box
& Pensions employee may be entitled with respect to 3, “Social Security Wages,” (up to the

any self-employment income. Social Security wage base) and box 5,
Qualified COVID-19 paid Only employers that claim tax credits “Medicare Wages and Tips,” respectively.
leave benefits: Reporting on under these provisions are required to To the extent qualified leave wages are
Form W-2 separately report qualified sick leave compensation subject to the Railroad

In Notice 2021-53, the IRS explained wages and qualified family leave wages Retirement Tax Act (RRTA), they must
how employers must report to their to their employees. Similarly, govern- also be included in box 14 under the ap-
employees qualified sick leave or fam- mental employers that are prohibited propriate RRTA reporting label(s).
ily leave wages paid in 2021. Under from claiming credits for qualified leave
the guidance, employers are required wages are not required to separately Reporting instructions for box 14
to report these wages either in box 14, report any qualified sick leave or family or separate statement
“Other,” of Form W-2, Wage and Tax leave wages paid to their employees. In addition to the regular reporting
Statement, or in a separate statement. requirements described above, affected
The IRS imposed this additional Background employers must report the following
Form W-2 reporting requirement so The Families First Coronavirus Re- information to employees in box 14 of
that employees who also have self- sponse Act (FFCRA), P.L. 116-127, as Form W-2 or in a separate statement:
employment income can properly claim amended, generally required covered ■ The total amount of qualified
their qualified sick or family leave equiv- employers to provide their employees sick leave wages paid for reasons
alent credits. Self-employed individuals with emergency paid sick leave and described in paragraph (1), (2), or (3)
can claim credits for equivalent amounts expanded family and medical leave for of Section 5102(a) of the EPSLA
if they would have received qualified specified reasons related to COVID-19 with respect to leave provided to
leave wages had they been treated as beginning April 1, 2020, through Dec. employees during the period begin-
an employee of an employer, but they 31, 2020. At the same time, the act ning on Jan. 1, 2021, through March
PHOTO BY BAKIBG/ISTOCK equivalent amount by some or all of any refundable tax credits to cover the cost employers must use the following, or
31, 2021. In labeling this amount,
may have to reduce their qualified leave
provided eligible employers with fully
qualified leave wages they received from
of these benefits (see U.S. Depart-
similar language: “sick leave wages
ment of Labor fact sheet, available at
subject to the $511 per day limit paid
an employer. In other words, qualified
for leave taken after Dec. 31, 2020,
tinyurl.com/czw2fbdv; and IRS FAQs,
leave wages received from an employer
available at tinyurl.com/y9srh67c).
may limit the amount of the qualified
and before April 1, 2021.”
www.thetaxadviser.com January 2022 7