IRS Notice 2020-54 COVID SICK and EFMLA reporting

Hi there, Borderland.

Once you set up payroll items for National Paid Leave FMLA, QuickBooks Desktop will finalize the Tax tracking of the PAyroll Item and will update this when you Submit W2 by the end of the year and ensure compliance to IRS.

Here's how to set up National Paid Leave FMLA:

1. Go to the Employees menu and choose Manage Payroll Items. Then, select New Payroll Item.
2. Select Custom Setup and select Next.
3. Select Addition. Then, select Next.
4. Give your pay type a name, such as National Paid Leave FMLA, in the text field and select Next.
5. Select COVID-19 Expenses (or whatever you named the expense account) as the expense account, and then Next. 
6. In the Tax Tracking type window, Select National Paid Leave FMLA, then Next.
7. In the Taxes window, select Next.
8. In the Calculate Based on Quantity window, select Neither, and then select Next.
9. In the Default Rate and Limit window, make sure the rate is at 0 and the limit is at $10,000, select One Time Limit from the Limit Type dropdown,
10. Hit Finish. 

For additional information, you can click this article: How to track paid leave and sick time for the coronavirus.

Please refer to this article to see information on how you can keep track of how you’re spending the funds from your Paycheck Protection Program (PPP) loan: Track how you use your Paycheck Protection Program loan.

Please be sure to leave me a reply if you have additional questions. Stay safe and have a wonderful rest of the day!

I was not asking how to setup the pay types. I was asking how is Quickbooks going to handle the reporting of them on the W2 in regards to notice 2020-54. There is specific language they say to use in box 14 that does not fit in Box 14.

Yes, it will be impossible to include in Box 14 the label “sick leave wages subject to the $511 per day limit;” in addition to the actual numerical figure. Certainly by the time around early to mid January when QB's form is eventually approved by the IRS for consumption that there will be a list of single letter or number codes to identify what you put in Box 14, similar to Box 12. The box is about 1" x 1.5" so if you only have one numerical entry the accompanying text (in about 6 pt) might actually fit

Of course the easiest solution is to enter all this information on a separate sheet of paper as allowed and outlined by the regulations

QuickBooks Desktop is printing "QSL EE $X,XXX" in Box 14.  This does not seem to meet IRS requirements.  Will this "bug" be fixed and if so when?  

More Detail IRS Notice 2020-54 says: https://www.irs.gov/pub/irs-drop/n-20-54.pdf 

"...employers must report to the employee the following type and amount of the wages that
were paid, with each amount separately reported either in Box 14 of Form W-2 or on a
separate statement:

• the total amount of qualified sick leave wages paid for reasons described in
paragraphs (1), (2), or (3) of section 5102(a) of the EPSLA; in labeling this
amount, the employer must use the following, or similar, language: “sick leave
wages subject to the $511 per day limit;” and
• the total amount of qualified sick leave wages paid for reasons described in
paragraphs (4), (5), or (6) of section 5102(a) of the EPSLA; in labeling this
amount, the employer must use the following or similar language: “sick leave
wages subject to the $200 per day limit.”

Meant to say:  I did see the wording today on a W-2 printed from different software.  That W2 says, "Sick leave wages subject to $500[$200] per day limit."

I can see the importance of indicating the correct information on your employees' Form W-2s in QuickBooks Desktop (QBDT) Payroll, @NumbersNC. That's why I'm here to share further details about this.

Currently, our payroll team is still working to implement the updates in Box 14 of the Form W-2. They want to make sure it complies with the IRS regulations. We're unable to provide a specific turn around time. However, I can assure you that it'll be fixed as soon as possible so you can file the said form on time.

On the other hand, you can also consider manually filling in the information of the required box for all your employees' Form W-2s. To learn more on how the form is generated, you can check out this article: How QuickBooks Desktop populates the boxes on the IRS Form W-2.

Additionally, here's an article that'll further guide you on the important dates and tasks to complete your 2020 payroll in QBDT: Year-end checklist for QuickBooks Desktop Payroll. It includes topics about running your final payroll and filing your forms on time.

You're always welcome to comment below if you have other payroll concerns or inquiries. I'm just around to help. Take care.

Is anyone else experiencing errors in the Box 3 and Box 5 wage bases for Social Security and Medicare, relative to EPSLA wages paid, as well as the Social Security and Medicare tax withholdings in Box 4 and 6?  

While I know I can go to manual creation of W-2s, it seems that Quickbooks should properly calculate the wage values within the W-2.

Allow me to share some insights about this issue, @Lynn D.

May I know the error message you’re receiving? If it’s about the inaccurate Social Security and Medicare Taxes calculation in your employee, downloading the most recent QuickBooks Desktop software release and Tax Table updates will help you keep your software up-to-date and to get the newest payroll tax table in your software.

If the payroll taxes are not deducting, it's possible that the total annual salary exceeds the salary limit or the gross wages of the employee are too low. You can check out this link to see How QuickBooks Desktop calculates payroll taxes.

For other troubleshooting options on why payroll taxes are not withholding, check out these articles: 

• Payroll items on a paycheck are not calculating or are calculating incorrectly
• QuickBooks Desktop calculates wages and/or payroll taxes incorrectly

If you have other questions or concerns, please let me know. I'll be around for you. Take care and have a great day ahead.

I am having to manually put the Covid Days in Box 14 on the W2, but the description the IRS wants in that box won't fit. How do I fix that? 

Let me provide some information about we populate Box 14 on W2, @BethL24.

The Box 14 will get the information from these tax types: CA SDI for California SDI contributions, CA VDPI for California Voluntary Disability Plan contributions, NJ SDI for New Jersey SDI contributions, UI/HC/WD for New Jersey welfare insurance contributions, Union Dues, Health Ins, Nontax Inc, Contrib, Ed Asst, Clergy Housing, PUCC (Personal Use of Company Car), and S-Corp. 

Here's how to create a tax tracking-type:

1. Go to the Lists menu and select Payroll Item List and locate the item name.
2. Right-click on the item and select Edit Payroll Item.
3. Click Next twice. 
4. On the Tax tracking type window, click the drop-down arrow to select the correct tax tracking-type.
5. Select Next until Finish.

See these articles for more information: 

• How to track paid leave and sick time for the coronavirus
• W2 form boxes explained

I'll be right here to help if you have other questions about the Box 14 on the W2. Take care and have a good one!

Why are my covid wages to employees, that are subject to federal income taxes not showing up in Box 1?The IRS information I have says it should be listed in boxes 1, 3, 5 and box 14. The Quickbooks w3 worksheet says "Items that impact FWH - but not a Box 1 tax tracking type". Would you please explain before I print my W2 forms? Thank you.

I can share some information on how we generate boxes 1, 3, 5 and 14 in your W-2, @jboss1​​​​​​​. 

Before printing your W-2 form, make sure to get the latest payroll tax table update to ensure that the correct dates appear on the forms. You can also run a payroll checkup in QuickBooks Desktop to identify missing information, identify tax amount discrepancies, and provide the steps on how to fix the problem.

Form W-2 is used to report an employee's annual wages and the amount of taxes withheld from paychecks. Here's how it generates boxes 1, 3, 5, and 14.

Box 1 reports the total taxable wages for federal income tax purposes. This figure includes your wages, salary, tips you reported, bonuses, and other taxable compensation. Any taxable fringe benefits (such as group term life insurance) are also included in your Box 1 wages.

Box 3 reports the total amount of wages subject to Social Security taxes. The amounts in Box 3 and Box 7 should equal either the amount in Box 1 or the $90,000 maximum wage base for Social Security taxes.

Box 5 reports the amount of wages subject to Medicare taxes. Medicare wages include any deferred compensation, 401(k) contributions, or other fringe benefits that are normally excluded from the regular income tax.

Box 14 is for any additional tax information like union dues, company-paid tuition assistance, health insurance premiums you paid, or after-tax contributions to a retirement plan will be reported here. It may also include State Disability Insurance (SDI) premiums.

See this article for more information: W2 form boxes explained. To know how it affects the amounts in Boxes 1, 3, and 5 on your employees’ W-2s, check this understand why the wage amounts are different on your employee's W-2 article. 

You can also check this article on how to fix an incorrect W-2. 

Stay in touch if you have other concerns by leaving a comment below. I'm always glad to help in any way I can.​ Have a great rest of the day. 

This last response doesn't seem correct.  The Box 3 SS max wage base has been over 90k for years.

---

@MJoy_D wrote:

I can share some information on how we generate boxes 1, 3, 5 and 14 in your W-2, @jboss1​​​​​​​. 

 

Before printing your W-2 form, make sure to get the latest payroll tax table update to ensure that the correct dates appear on the forms. You can also run a payroll checkup in QuickBooks Desktop to identify missing information, identify tax amount discrepancies, and provide the steps on how to fix the problem.

 

Form W-2 is used to report an employee's annual wages and the amount of taxes withheld from paychecks. Here's how it generates boxes 1, 3, 5, and 14.

 

Box 1 reports the total taxable wages for federal income tax purposes. This figure includes your wages, salary, tips you reported, bonuses, and other taxable compensation. Any taxable fringe benefits (such as group term life insurance) are also included in your Box 1 wages.

 

Box 3 reports the total amount of wages subject to Social Security taxes. The amounts in Box 3 and Box 7 should equal either the amount in Box 1 or the $90,000 maximum wage base for Social Security taxes.

 

Box 5 reports the amount of wages subject to Medicare taxes. Medicare wages include any deferred compensation, 401(k) contributions, or other fringe benefits that are normally excluded from the regular income tax.

 

Box 14 is for any additional tax information like union dues, company-paid tuition assistance, health insurance premiums you paid, or after-tax contributions to a retirement plan will be reported here. It may also include State Disability Insurance (SDI) premiums.

 

See this article for more information: W2 form boxes explained. To know how it affects the amounts in Boxes 1, 3, and 5 on your employees’ W-2s, check this understand why the wage amounts are different on your employee's W-2 article. 

 

You can also check this article on how to fix an incorrect W-2. 

 

Stay in touch if you have other concerns by leaving a comment below. I'm always glad to help in any way I can.​ Have a great rest of the day. 

---