School districts need to ensure correct reporting of Families First Coronavirus Response Act (FFCRA) paid leave benefits.
Texas Association of School Business Officials (TASBO) recently provided school entities a training webinar discussing the importance of reporting FFCRA wages on the W-2 form for all school entities, as well as the requirements associated with FFCRA wages for those school entities who pay Social Security taxes (FICA).
The recorded webinar, available for a fee to TASBO members through their website, covers the provisions of FFCRA leave, how to identify if the school entity is subject to FICA wages and taxes, and provisions for reporting FFCRA wages on the required W-2 form for 2020.
Key points for school entities to remember for reporting FFCRA wages include the following:
- All public school districts are required to offer FFCRA leave and therefore are subject to FFCRA reporting requirements for the 2020 W-2 form. Private sector employers with fewer than 500 employees also fall under these requirements, which may apply to public charter schools.
- School entities need to identify and track leave eligibility for employees, as well as the reason used for paid leave days related to FFCRA. Best practice is to determine which days are designated for FFCRA leave and which days are identified as personal leave days for each employee.
- FFCRA wages must be reported on the W-2 for all employees of school entities. For those entities paying FICA taxes, FFCRA wages are subject to ONLY the employee portion of FICA taxes. These wages will be reported on the 941 report for these entities. For more guidance on how to report these wages, the above referenced webinar has detailed information on how to access and report wages on the 941 form.
- On the W-2 form, employers must report the amount of qualified sick and family leave wages paid to employees under FFCRA. Entities must enter amount in box 14 on the W-2 form or in a supplemental statement provided to the employee at the time of distribution of the W-2 form. Guidance and language can be found in Notice 2020-54 from the Internal Revenue Service (IRS).
- For school entities subject to FICA taxes, additional information must be included in the 941 form and wages must be identified appropriately to be subjected to the correct tax rate. Entities should use the form updated in July 2020 and adjust amounts to ensure correct reporting.
Reconciliation time and the distribution of W-2s is right around the corner with January 2021 quickly approaching, so school entities should act now to ensure all relevant leave information is updated and adjusted, as necessary. For some entities, this may mean retroactively identifying and labeling FFCRA leave days and assigning the appropriate FFCRA leave reasons to the days used by employees.
More information can be found through TASBO, the IRS, and in related governmental guidance for FFCRA.
Jennifer Barton is a compensation and HR consultant at TASB HR Services. Send Jennifer an email at email@example.com.
Stay up to date with all the latest HR news and trends by joining the HRX mailing list!