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Level 1

COVID-19 payroll tax credits

Hello Folks,

I'm scratching my head on how to apply the payroll tax credits after I've paid an employee COVID sick pay.  Paying the employees doesn't seem to be an issue, but it's applying the payroll tax credits properly so that I'm not in trouble with the IRS for taking inappropriate  credits and that my 941 report isn't a nightmare.  The QB info pages on "How to track paid leave and sick time for the coronavirus" dated in July 2020 doesn't mention the Medicare Company portion that I believe is a credit. It mentions how to set up the National Paid Leave & Medicare Credit.  When I pay my 941, may I take the credit there and if so, what will my 941 look like?  Also, when setting up this credit in the Payroll Item List QB suggests using the COVID-19 expense account both times.  Is that correct or should we be used the COVID-19 Payroll liabilities account in the first box?  Any guidance from the Community would be helpful.  Thank you.  Lynda

1 Comment
QuickBooks Team

COVID-19 payroll tax credits

Hello, LyndaKShaw. 


Let me share some information on how to apply for the payroll tax credit after you've paid your employees covid sick pay in QuickBooks.  


To track the National Paid Leave Medicare Credit, Form 941, and your Covid-19 expense account, you’ll have to follow the steps provided in this article: How to track paid leave and sick time for the coronavirus


That’ll make sure that your employees got the money they needed and comply with the Family First Coronavirus Response Act (FFCRA). You’ll have to set up your expense accounts for the paid leave from the Chart of Accounts and then set up your liability and expense accounts.


Check this article for more information: How QuickBooks Populates The 941.


Let me know if you still have questions with your tax credit in QuickBooks. I'm always here to help. Have a wonderful day!

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