Category Archives: Tax Forms

Time for Employers that Were Subject to FFCRA Leave to Send Corrected W-2s?

Contributed by guest author Joe Demko, February 2, 2021

The pen lies on the tax form W-2 Wage and Tax Statement. The time to pay taxes

2020 was certainly a unique year for employers and employees. This includes complications with wage reporting. 

Most employers have issued wage reports to their employees by the January 31st deadline and prior to the publication of this alert. These employers must now determine whether they are required to issue corrected Form W-2s.

Thanks to the Families First Coronavirus Response Act (FFCRA) (which required employers with fewer than 500 employees to provide paid sick and family leave for certain COVID-related reasons) certain employees received paid sick leave when unable to work and paid family leave to take care of a son or daughter in the event of a school closure or their child care provider was unavailable due to COVID-19. These payments are counted as wages. 

The IRS has released guidance on the requirement that employers report qualified paid sick and family leave wages provided under the FFCRA. See IRS Notice 2020-54. Unfortunately, this guidance was not incorporated into the instructions for Form W-2.  As a result, many employers likely misreported leave payments and must send corrected Form W-2s to their employees.

Reporting qualified leave wages on Form W-2.

Qualified sick and family leave wages must be reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form W-2.  In addition, employers must separately report in Box 14 of Form W-2 or on a separate statement the amounts it paid to the employee for the various forms of FFCRA leave:

  • The total amount of qualified Emergency Paid Sick Leave wages paid while  the employee was quarantined or experiencing symptoms and seeking a diagnosis, when applicable, using the following or similar language: “sick leave wages subject to the $511 per day limit”;
  • The total amount of qualified Emergency Paid Sick Leave wages paid  while the employee was caring for someone else, when applicable, using the following or similar language: “sick leave wages subject to the $200 per day limit”; and
  • The total amount of qualified Emergency Family and Medical Leave Expansion Act leave wages paid using the following or similar language: “emergency family leave wages”.

If the employer opts to provide a separate statement to report qualified sick or family leave wages, it must be provided with the employee’s Form W-2 in the same manner (paper vs. electronic) and time as the W-2.

Bottom-Line

Most employers would likely have incorporated FFCRA wages in Boxes 1, 3 and 5 as the payments were issued to employees through the regular payroll process. However, separately delineating the exact amount of FFCRA wages paid in Box 14 (which is primarily for informational purposes) is important where an individual is self-employed. With the specific FFCRA wages delineated in Box 14, it is easier for the IRS and the taxpayer to ensure an individual does not collect duplicative FFCRA benefits.

What the W-4 is that? Answers to Your Questions about the New W-4

Contributed by Michael Wong, January 8, 2020

The process of filling out the W-4 form, shallow depth of field

Following the 2017 Tax Cuts and Jobs Act, which made major changes affecting taxpayer withholding, the IRS announced it would be redesigning Form W-4. The new W-4 has officially been released, creating confusion and questions (at the time of this article the new federal 2020 W-4 can be found on the IRS website).

First and foremost, employers do NOT need to get all employees to sign a new W-4. According to IRS Publication 15, employers are to remind employees before December 1 each year to submit a new W-4 form if their withholding allowances have changed or will change for the next year. If the employee does not submit a new W-4 form, the company must continue to withhold taxes pursuant to the last valid W-4 that was provided. If the employee has not ever submitted a valid W-4, the company must withhold tax as if the employee is single with no other adjustments.

So, again, just because there is a new W-4 form (that looks drastically different), you do not have to have all of your current employees fill out a new W-4. A W-4 previously filled out by an employee will continue to be good until the employee decides to change their withholdings. The only exception is employees who claim to be exempt from any withholdings (i.e. no taxes withheld at all from wages). As addressed below, employees must complete a new W-4 annually to maintain a full exemption

Employers should ensure that new W-4s are used as follows:

  • New employees. All new employees hired or paid in 2020 are required to use the current year’s W-4 form and applicable state W-4. 
  • Employees who want to change their withholdings. Life can sometimes change quickly, if something happens during the year and an employee wants to change his or her exemptions, adjustments, withholdings or credits, the employee will need to fill out a the new W-4 form and applicable state W-4.  Note, an employee is permitted to complete a W-4 anytime, not only when a major life event happens — this could be as simple as the employee realizing that instead of getting a refund, he or she wants to stop providing an interest free loan to the government.
  • Employees claiming exemption from withholding. All W-4s claiming an individual is exempt from any taxes being withheld expire on February 16th each year. This means, that any employee claiming to be exempt from withholdings, should be reminded to turn in a new W-4 (using the new form) by February 15th and advised that if they do not submit a new W-4, you are required to withhold taxes based on the last W-4 in which the employee did not claim to be exempt or, if the employee has always claimed a complete exemption, the employee will be treated as being single with no other adjustments.

To help employees (and you) the IRS has created an Estimator to help employees determine what they should put on their W-4 at www.irs.gov/W4App

Finally, W-4s have to be filled out for all non-U.S. Citizens (“Aliens”). Resident Aliens should be treated the same as U.S. Citizens when filling out the new W-4. Nonresident aliens should be provided the Supplemental Form W-4 Instructions for Nonresident Aliens, which provides:

  • Non-Resident Aliens cannot claim they are exempt from income tax withholding;
  • Non-Resident Aliens must request withholding as if they are “Single”, even if he or she is married;
  • Nonresident Aliens must still provide a SSN, they cannot enter an ITIN on Line 2.
  • Only certain nonresident aliens who are residents of Canada, Mexico, South Korea, or India may be eligible to claim an additional allowance for the child tax credit. To claim the child tax credit your child must have an SSN valid for employment issued prior to the due date of your tax return (including extensions).
  • Write “Nonresident Alien” or “NRA” in the space below Step 4(c) of Form W-4.

So, while the changes in the tax code and W-4 are championed as creating more transparency and simplifying the accuracy and simplicity of the W-4 form, as with all change it will initially create more confusion and panic, just like Y2K. But don’t worry, 2020 is just the beginning to another new decade.

USCIS Proposes New Form I-9

Contributed by Sara Zorich

The current version of the Form I-9 is set to expire on 3/31/16. In advance of the expiration, USCIS has issued proposed changes to the Form I-9 for public comment. The new version would allow employers to complete the form on their computer with some imbedded prompts assisting them in the completion of the form. This is an attempt to reduce technical errors commonly made on the Form I-9. Employers would still be able to complete the form by hand if they choose to do so.

Some of the proposed changes included are:

  • Electronic checks on certain fields to ensure accuracy
  • Drop down lists for documents and calendars
  • Additional instructions to assist in completing fields
  • Streamlining the certification for foreign nationals
  • Separating the instructions from the form itself

Note, this new proposed Form I-9 is NOT an electronic I-9 as defined by the regulations. Thus, if a company uses this new form on their computer, they would still need to print the form, have the employee sign Section 1 and the employer would sign Section 2 and retain the original form.

The public comment period for the proposed changes ends on January 25, 2016. The proposed regulation and comment link can be found at http://www.regulations.gov/#!docketDetail;D=USCIS-2006-0068.

Employers should continue to use Form I-9 version 03/18/13N with expiration date 3/31/16 until a new version of the form is approved. The current version of the form may be found at http://www.uscis.gov/sites/default/files/files/form/i-9.pdf.