Payroll Item for Covid-19 Emergency Paid Sick Leave

Welcome to Community, @Brod.

I'll share the steps on how to set up the Emergency Paid Sick Leave or FFCRA in QuickBooks Desktop. You'll need to set up your expense accounts for the paid leave first. This is where you keep track the eligible wages to use towards tax credits later on. Then set up the payroll items to track your paid leave. Lastly, run your payroll. Let me walk you through the steps.

To create an expense account:

1. Go to the Lists menu, then select Chart of Accounts.
2. Scroll down towards the Account ▼ drop-down, then hit New.
3. Choose Expense, then Continue.
4. From the Account Type drop-down, tick Other Expense.
5. Give your expense account a name, such as COVID-19 Expenses, in the Name field, fill out all the relevant information, and click Save and Close.

After creating an account, set up a payroll items. Here's how:

1. Go to the Employees menu, then Manage Payroll Items, then select New Payroll Item.
2. Choose Custom Setup, then Next.
3. Pick Addition (Employee Loan, Mileage Reimbursement), then Next.
4. Give your pay type a name, such as National Paid Leave EE or National Paid Leave Family, then Next.
5. In the Expense account window, take COVID-19 Expenses (or whatever you named the expense account) and then Next. 
6. In the Tax tracking type window, pick out the paid leave type, such as National Paid Leave EE or National Paid Leave Family based on what you are setting up as the tax tracking type.
7. In the Taxes window, snap Next.
8. In the Calculate Based on Quantity window, tap Calculate this item based on Quantity, and then Next.
9. In the Default Rate and Limit window, set the rate for the following items. The National Paid Leave Employee limit is $5110 and the National Paid Leave Family is $2000.
10. Ensure the Limit Type is Annual, restart each year, and then click Finish.

After setting up the payroll item, set up a new tax item. This is use for tracking the tax credits.

1. Go to the Employees menu, then Manage Payroll Items, then select New Payroll Item.
2. Choose Custom Setup, then Next.
3. On the Payroll item type window, pick Other Tax, then Next.
4. On the Other Tax window, tap National Paid Leave Credit, then Next.
5. In the Name used in paychecks and payroll report window, enter National Paid Leave Credit in the text field, then Next.
6. In the Agency for company-paid liability window, take the agency you pay taxes too from the dropdown, pick out COVID-19 Expenses in the Liability account dropdown, and then COVID-19 Expenses (or whatever you named the expense account) in the Expense account drop-down, and then Next.
7. From the Taxable Compensation window, snap Next.
8. In the Pre-tax deductions window, select the item that will reduce wages for this tax. Then click Finish.

Once done, run your payroll and use this payroll item for your eligible employee. For more information about the setup, check out this guide: How to track paid leave and sick time for the coronavirus.

If you need help with claiming your tax credits, click this link to for the step-by-step instruction.

Feel welcome to message me anytime if you still have questions or concerns. I'm always here to assist you. Take care and have a wonderful rest of the week.

"In the Default Rate and Limit window, set the rate for the following items. The National Paid Leave Employee limit is $5110 and the National Paid Leave Family is $2000." you do not seem to state the rate, but give the limits. What would be the rate, then? 0?

"In the Pre-tax deductions window, select the item that will reduce wages for this tax. Then click Finish." I have no idea which item this would be? How on earth would I know? Do I need to set one up there, too?

I am so thankful for the instructions, but I wish you folks would not leave out things when giving instructions.

I'm here to help ensure you'll be able to enter the default rate and choose the correct item for your pre-tax deductions, BoroSec.

Since we can't suggest the default rate and the correct items to use, I recommend reaching out to the SBA and Treasury's website.

They'll be able to provide you the correct rate as well as choosing the right item that fits your business. You'll need to set up these items to ensure you're paying the employees since this is required under your state or local jurisdiction. Also, these will be reported to your 941 forms.

If you have any clarifications about the COVID-19 Emergency paid Sick Leave, feel free to visit this link: What you need to know about the Families First Coronavirus Response Act. This will provide you more details on how to use the federal tax credit as well as an article regarding Coronavirus tax relief.

You can always get back to me if I can be of assistance while working in QuickBooks Desktop or if you have additional questions about creating a payroll item. I'd be more than willing to lend you a hand.

The information for setting up the Other Tax does not give me a National Paid Leave Credit choice.

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@ShiellaGraceA wrote:

Welcome to Community, @Brod.

 

I'll share the steps on how to set up the Emergency Paid Sick Leave or FFCRA in QuickBooks Desktop. You'll need to set up your expense accounts for the paid leave first. This is where you keep track the eligible wages to use towards tax credits later on. Then set up the payroll items to track your paid leave. Lastly, run your payroll. Let me walk you through the steps.

 

To create an expense account:

 

1. Go to the Lists menu, then select Chart of Accounts.
2. Scroll down towards the Account ▼ drop-down, then hit New.
3. Choose Expense, then Continue.
4. From the Account Type drop-down, tick Other Expense.
5. Give your expense account a name, such as COVID-19 Expenses, in the Name field, fill out all the relevant information, and click Save and Close.

After creating an account, set up a payroll items. Here's how:

1. Go to the Employees menu, then Manage Payroll Items, then select New Payroll Item.
2. Choose Custom Setup, then Next.
3. Pick Addition (Employee Loan, Mileage Reimbursement), then Next.
4. Give your pay type a name, such as National Paid Leave EE or National Paid Leave Family, then Next.
5. In the Expense account window, take COVID-19 Expenses (or whatever you named the expense account) and then Next. 
6. In the Tax tracking type window, pick out the paid leave type, such as National Paid Leave EE or National Paid Leave Family based on what you are setting up as the tax tracking type.
7. In the Taxes window, snap Next.
8. In the Calculate Based on Quantity window, tap Calculate this item based on Quantity, and then Next.
9. In the Default Rate and Limit window, set the rate for the following items. The National Paid Leave Employee limit is $5110 and the National Paid Leave Family is $2000.
10. Ensure the Limit Type is Annual, restart each year, and then click Finish.

After setting up the payroll item, set up a new tax item. This is use for tracking the tax credits.

1. Go to the Employees menu, then Manage Payroll Items, then select New Payroll Item.
2. Choose Custom Setup, then Next.
3. On the Payroll item type window, pick Other Tax, then Next.
4. On the Other Tax window, tap National Paid Leave Credit, then Next.
5. In the Name used in paychecks and payroll report window, enter National Paid Leave Credit in the text field, then Next.
6. In the Agency for company-paid liability window, take the agency you pay taxes too from the dropdown, pick out COVID-19 Expenses in the Liability account dropdown, and then COVID-19 Expenses (or whatever you named the expense account) in the Expense account drop-down, and then Next.
7. From the Taxable Compensation window, snap Next.
8. In the Pre-tax deductions window, select the item that will reduce wages for this tax. Then click Finish.

Once done, run your payroll and use this payroll item for your eligible employee. For more information about the setup, check out this guide: How to track paid leave and sick time for the coronavirus.

 

If you need help with claiming your tax credits, click this link to for the step-by-step instruction.

 

Feel welcome to message me anytime if you still have questions or concerns. I'm always here to assist you. Take care and have a wonderful rest of the week.

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Thank you for joining the thread, @BCS1600.

It's my pleasure to help you with setting up your payroll item accordingly.

You should be able to locate the National Paid Leave Credit option under the Other tax drop-down. To narrow down the result, I recommend scrolling the available choices again up and down to see the option. I'm adding this screenshot for your visual reference.

Just in case it's still missing from there, you can perform some basic troubleshooting steps to isolate the issue. I can guide you with the detailed process.

First, I recommend updating your QuickBooks Desktop to the latest release to get the latest available features and fixes.

Here's how:

1. Go to the Help menu, then click on Update QuickBooks Desktop.
2. Switch to the Update Now tab and select the Reset Update checkbox to clear all previous update downloads.
3. Click on Get Updates to start the download.
4. When the download finishes, restart QuickBooks.
5. When prompted, accept the option to install the new release.

Once done, get the newest payroll tax table in QuickBooks Desktop Payroll to stay compliant with payroll items and paycheck calculations. You can use this article as your guide: Download the latest tax table in QuickBooks Desktop.

On the other hand, here's an article you can read more about how to pay your employees' leave that was affected by COVID-19: Track paid leave and sick time for the coronavirus.

If you have any other follow-up questions about setting up your payroll items in QBDT, please let me know by adding a comment below. I'm more than happy to help. Cheers for more success!

Hello, I've done all of the updating suggested and I'm still not seeing the National Paid Leave Credit on my list. 

I am running Enhanced Payroll on QB Desktop Pro 2020.

Hello there, LGBrewCo.

Looks like you've already done the steps on how to resolve the missing National Paid Leave Credit on the payroll item setup. Since those didn't work, I suggest contacting our QuickBooks Care Team. This requires to be taken a closer look to investigate why you're not seeing the said option.

Here's how to reach them:

1. Open QuickBooks.
2. Select the Help menu, and then choose QuickBooks Desktop Help.
3. Click Contact Us.
4. Give a brief description of your issue, then select Let's talk.
5. Choose your preferred way to connect with us.

If you need other payroll articles, you can always visit our site: QuickBooks Payroll Services and Features for QuickBooks Desktop

Feel free to visit our QuickBooks Help Articles page for more insight s about managing your business in your software.

Let me know how things work out. I'll be right here to help if you need more help with creating a backup or with QuickBooks. Take care! 

We did all the setup on the National Paid COVID pay and have been running it.  The only thing is shows up as a payroll liability on our balance sheet like we owe that liability and is a running total from 2020 -2021.  Do we need to do a journal entry year end for this to get this amount removed from our balance sheet?  I have called into QB at least 5 times and everyone has a different answer or have no clue why it shows as a liability and an overpayment on the transaction. 

I appreciate the time you've spent in reaching out to us, dknight2.

Let me share some information about how paid leave and sick time are tracked in QuickBooks.

The national paid leave should show as COVID-19 expenses in your financial reports. Take note these payroll items are added as an addition or company contribution in QuickBooks Desktop.

To isolate the issue, you'll want to make sure that the payroll items you use to track each type of paid leave are properly set up. You can refer to this article to be guided in checking it: How to track paid leave and sick time for the coronavirus.

Moreover, after running your payroll, you'll get the tax credit after you you’ve given your employees paid leave or provide health benefits under the FFCRA and ARPA.

Lastly, here's an article that you can browse to learn more about the Families First Coronavirus Response Act and American Rescue Plan Act: What you need to know about the FFCRA and ARPA.

If there's anything else that I can help you with, please don't hesitate to leave a comment below. The Community always has your back.