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How to claim your tax credits under the Family First Coronavirus Response Act

Update: With the passage of the Consolidated Appropriations Act and the American Rescue Plan Act (ARPA) of 2021, the credits provided are now extended until September 30, 2021. The limit is increased from $10,000 to $12,000. Additionally, the maximum tax credit amounts employers can claim for each employee will reset on April 1, 2021. This allows an employee who uses the maximum leave through March 31, 2021 the option to use additional FFCRA leave April 1, 2021 through September 30, 2021.  Additional leave is discretionary, allowing employers to voluntarily determine the use of FFCRA leave.

Learn how to get your tax credits within QuickBooks Desktop Payroll after you’ve given your employees paid leave.

With QuickBooks Desktop Payroll, you can ensure you get the tax credit after you paid your employees paid leave or provide health benefits under the FFCRA and ARPA.

Note: For eligible leave taken on or after April 1, 2021, you'll need to set up and use new payroll items not already used for FFCRA to get the appropriate credits.

To learn how to set up and pay FFCRA and ARPA, see How to track paid leave and sick time for the coronavirus.

Before you can take credit, you need to do a few things. Choose your product to see steps.

Note: Not sure which payroll service you have? Here's how to find which payroll service you have.

QuickBooks Desktop Payroll Assisted

When you create payroll using FFCRA paid leave and send payroll to Intuit, a payroll liability check automatically posts to your check register in QuickBooks Desktop. This liability check will automatically include your tax credit. No further action from you is needed.

QuickBooks Desktop Payroll Basic, Standard, Enhanced

Step 1: Get a Quick Report to see balances for the credit

Follow these steps to get a report for the amount you'll enter while creating a liability check for your taxes.

  1. Go to your Chart of Accounts, then select the COVID-19 Expenses account. This can include all 5 National Paid Leave payroll items:
    • National Paid Leave Employee sick
    • National Paid Leave Family Leave
    • National Paid Leave FMLA
    • National Paid Leave Employer health Insurance cost
    • National Paid Leave Medicare credit
  2. Select the Reports ▼ dropdown, then select QuickReport.
  3. Select Customize Report. In the Columns box, type in Qty then select it.
  4. Select OK. This will show you the quantity (hours) on the items used.
  5. Update the dates to reflect the paycheck date you are looking for. The amount should show all the payroll items you’ve set up and run payroll on. The amount in the Total column reflects the amount of the Credit you can enter on the Liability check.

Step 2: Create a check to pay the payroll liabilities

Once you’ve figured out how much you owe, you can now ensure that you’ve created a check to pay the tax liabilities.

  1. Go to the Employees menu, then select Payroll Center.
  2. Select the Pay Liabilities tab.
  3. In the Pay Taxes & Other Liabilities section, mark the Federal 941 and other liabilities, make sure the check amount and item list under Payroll Liabilities are accurate, and then select View/Pay.
  4. On the Payroll Liabilities window, select Create.
  5. Go to the Payroll Liabilities tab and enter the National Paid Leave Credit, National Paid Leave - Health Premium and the amount of the 941 tax liabilities you qualify for based on the Payroll Item Detail Report you created.  You’ll need to enter the amount of the credit as a negative amount. (If your tax liability is less than the credit amount, the credit can be used in subsequent payroll liability payments.)
  6. Select To be printed if you want to print the check. If you used a handwritten check, enter the check number or other reference in the NO. field. If you pay liabilities by Electronic Funds Transfer (EFT), clear the To Be Printed checkbox and type EFT in the No. field of the liability check.
  7. Select Save & Next or Save & Close.
  8. You’ll see your Payroll Liability Payment Summary and can then review the payments you scheduled, print a copy of the summary, and print checks.
  9. You can re-run the QuickReport to see the difference in the liabilities credit you are still able to claim if your credit was larger than your liability.

Learn more about requesting advance payment of the tax credits with IRS Form 7200.

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