W-2 Reporting Requirements | W-2 Changes for 2020 Forms
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Changes to W-2 Reporting for Tax Year 2020? You Can Thank COVID-19

If you thought keeping up with yearly tax law changes was hard enough, you might not be happy to hear this news. There are a couple changes to Form W-2 reporting you may need to pay attention to.

Read on to learn about important W-2 changes for 2020 and what you need to do to comply. 

Form W-2 reporting changes

Each year, employers are responsible for reporting employees’ annual wages and withheld taxes on Form W-2. And, you might need to enter additional benefits like retirement plan earnings and third-party sick pay.

This year, Congress enacted a number of emergency pieces of legislation to financially help employers and employees navigate the uncharted waters that are COVID-19. 

That means it’s your responsibility, as an employer, to report the financial help employees received from the coronavirus legislation. 

So, what are the 2020 W-2 changes? You must report the following on any employee’s W-2 who received one of these COVID-19 benefits:

  • Paid COVID-19 sick or family leave
  • Deferred employee Social Security tax

Reporting paid COVID-19 sick or family leave on Form W-2

The Families First Coronavirus Response Act (FFCRA) required that qualifying employers provide paid sick and family leave to eligible employees between April 1, 2020 and December 31, 2020. 

how to report FFCRA paid sick or family leave on form w-2: include in boxes 1, 3, and 5; report amount in Box 14 or report amount in a separate statement

Background 

Under the FFCRA, employees could receive paid leave in the following situations:

  • 10 days of paid sick leave at the employee’s regular rate of pay: Employees who are quarantined or isolated due to the coronavirus, up to a maximum daily rate of $511 ($5,110 total maximum). 
  • 10 days of paid sick leave at two-thirds of the employee’s regular rate of pay: Employees who are caring for someone who is quarantined or isolated due to the coronavirus, up to a maximum daily rate of $200 ($2,000 total maximum). 
  • 10 weeks of paid family leave at two-thirds of the employee’s regular rate of pay: Employees caring for a child whose school or childcare center had closed, up to a maximum daily rate of $200 ($10,000 total maximum). 

If you doled out one or more of the above coronavirus paid sick or family wages to employees, report the amounts on Form W-2. 

Where to report paid leave on Form W-2 

According to the IRS, you must do the following when reporting FFCRA sick pay and paid family leave: 

  1. Include the amount in boxes 1, 3, and 5 on Form W-2
  2. Report the amount in box 14 (Other) on Form W-2 OR report the amount in a separate statement and attach to Form W-2 

If you choose to report the paid leave in a separate statement, make sure you send it at the same time—and in the same way (e.g., paper vs. electronic)—you send the employee their Form W-2.

2020 Form W-2 copy with boxes 1, 3, 5, and 14 in red boxes

Describing the paid leave amounts on Form W-2 

When reporting the amount in Box 14 on Form W-2 or in a separate statement, you can use the following descriptions (provided by the IRS) to describe each amount the employee received: 

  • “Sick leave wages subject to the $511 per day limit.” 
  • “Sick leave wages subject to the $200 per day limit.”
  • “Emergency family leave wages.”

Reporting deferred employee Social Security tax on Form W-2 

On August 8, the president signed an executive order allowing employers to defer eligible employees’ Social Security tax obligations between September 1, 2020 and December 31, 2020. 

How to report deferred Social Security tax on Forms W-2 and W-2c

Background

Under the employee Social Security tax deferral, employers could defer collecting the employee Social Security tax portion for employees earning less than:

  • $2,000 weekly
  • $4,000 biweekly
  • $4,333.33 semimonthly
  • $8,666.67 monthly

If you deferred an employee’s Social Security tax, you are responsible for collecting the deferred tax amount between January 1, 2021 and April 30, 2021. 

And, you must report the deferred amount on Form W-2.  

Where to report deferred Social Security tax on Form W-2

According to the IRS, reporting deferred Social Security tax requires you to fill out both Form W-2 and Form W-2c.

First, complete Form W-2. Do NOT report the deferred Social Security tax on the employee’s W-2 form. However, you do need to report the employee’s total taxable wages on their W-2 form. 

Take a look at your W-2 reporting requirements if you deferred Social Security tax:

  • Include wages for which you deferred Social Security tax on in box 3 and/or box 7
  • Do not include deferred employee Social Security tax you did not withhold in box 4

As soon as you finish withholding the deferred taxes in 2021, you need to fill out Form W-2c, Corrected Wage and Tax Statement. 

Take a look at what you need to do with the corrected W-2:

  • Enter tax year “2020” in box c 
  • Report deferred Social Security tax you withheld in 2021 and did not report on the 2020 Form W-2 in box 4 on Form W-2c

Send Forms W-2c, along with Form W-3c, to the Social Security Administration as soon as possible. Also distribute Forms W-2c to your employees. 

If you feel like things are getting more complex by the second, you’re not alone. That’s where Patriot’s payroll comes in. We make it easy to run payroll, and when the time comes, you can post electronic W-2s for employees to view in their own portal (with employee consent) or print paper copies to distribute. Easy enough, right?

This is not intended as legal advice; for more information, please click here.

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