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msandco
Level 1

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

The way the FFRCA "National Paid Leave Credit" is currently being set up does not include the credit for the Employer portion of Medicare tax.  Any suggestions on how to adjust the settings on the various payroll items to reflect this or add a new one?

 

29 Comments 29
Nick_M
QuickBooks Team

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Hi msandco. 

 

Thanks for coming into the QuickBooks Community. What you're going to want to do is make sure your QuickBooks product is up to date, if it isn't you'll manually want to update it with the steps below. 

 

Check for the latest release

  1. Open QuickBooks Desktop.
  2. Press F2 (or Ctrl+1) to open the Product Information window.
  3. Check your current version and release at the following link 

-Current release

 

If it needs to be updated follow these steps:

 

  1. Close your company files and QuickBooks.
  2. Open the Windows Start menu.
  3. Search for QuickBooks Desktop. Right-click the icon and select Run as administrator.
  4. While on the No Company Open screen, go to the Help menu and select Update QuickBooks Desktop.
  5. Go to the Options tab. Select Mark All and then select Save.
  6. Go to the Update Now tab and select the Reset Update checkbox.
  7. When you're ready, select Get Updates.

When the update finishes, close and reopen QuickBooks Desktop. To install the updates, select Yes.

 

When the install finishes, restart your computer.

 

When the update is finished follow the steps in the link below to set up Paid leave and sick time for the Coronavirus. It will account for tax deferment once this is setup and your account is up to date

 

- How to track paid leave and sick time for the coronavirus

 

If you have any other questions or concerns, feel free to post them below. 

 

Thank you and have nice evening.  

Jvit
Level 2

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

My product is up to date and the link you provided doesn't address the Medicare tax credit.  Please advise specifically how to set up the "National Paid Leave- Medicare".

ReyJohn_D
Moderator

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Thanks for joining the thread, @Jvit.

 

I'm glad to hear that your QuickBooks Desktop is up-to-date.

 

I'd like to inform you that in the next few weeks, QuickBooks will be rolling out for updates so you apply these credits to your payroll to ensure you’re compliant and using these credits correctly. You may refer to this article to learn more about Families First Coronavirus Act (FFCRA): What is FFCRA?

 

Fill me in if you have more questions. I'll be around to help. Take care and have a great day!

Jvit
Level 2

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

With all due respect, you didn't answer the question

ReyJohn_D
Moderator

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Hi, @Jvit.
 

I've already updated my answer above. Just to clarify that with regards to the steps on how to set up your National Paid Leave for Medicare, QuickBooks will be giving you updates about it in the next few weeks.
 

Please let me know if you have more questions.

ScrappinPeg
Level 3

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Yesterday, I spent 6 hours on chat and another 3.5 hours on the phone with QB representatives, who knew as little about all of this as me, trying to resolve this whole credit issue.  We FINALLY saw that the employer part of  social security was being calculated on the part of wages that did not pertain to the Sick Leave, but the 6.2% for the Sick Leave is no where to be had - it is just forgotten.   How are we to track all taxes if an amount is just zero out?

Plus, just like everyone else in this thread, the Medicare tax was not affected at all.  The person @ QB, again I reiterate - who didn't know much more than me - gave me a work around, where in we set up a Payroll item names "National Pd Leave Crdt - Medicare" as a company contribution.  We then had to add it to the employee information/payroll info/additions,deductions and contrib.  When we ran payroll, I had to go into each affected employee's paycheck and add a rate (the National Paid Leave EE wage * .0145) and 1. for quantity under the 'Other Payroll items' .

All fine and dandy, but VERY cumbersome if you have tens or hundreds of employees that are affected.  Plus once QB every gets this figured out, will we have to go back into those paychecks and reverse what we did or should I totally ignore the 7.5 + hours of time I spent talking with QB yesterday and leave it till yet another pay period goes by and hope there is a fix?

As a full-charge bookkeeper with 35 years of experience, it seems to me what they have done so far is not a very clean way of tracking the wages and taxes that should be credited.  Been through 2 pay periods and it it is becoming difficult for me to remember all the specialties of each employee so I started an excel spread sheet to track wages and taxes for which we should receive credit so that whenever this does get worked out, I have the information handy and ready to go. 

 

ZackE
QuickBooks Team

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Hello, ScrappinPeg. The Community is here to help.
 

Intuit is pushing out updates to all QuickBooks Payroll products and our support articles on a daily basis to ensure that everything is up-to-date with all of the changes taking place. I thank you for your patience as we continue working to support you and your business.
 

Recently, an update was made to our how to track paid leave and sick time for Coronavirus article (in step #3) which details how to set up and track Medicare payroll items. You can compare our steps in that article with the workaround process provided to you over the phone. Ultimately, following the steps provided in our article will assure that your books have all of the records entered correctly.
 

If you have any other questions, you can reach out to me here anytime. Have a wonderful day!

Jvit
Level 2

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Thank you for the update, however, it still doesn't address how to apply the "national paid leave - medicare" to the employee's check nor does it address the credit issue!  Please help!!

Jvit
Level 2

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

According to my research -- the employer-paid social security tax is NOT paid when paying an employee sick due to Covid-19:  https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-...

 

Steve_C
QuickBooks Team

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Hi Jvit. Thanks for replying. The article my colleague ZackE mentioned about how to track paid leave and sick time for the coronavirus covers how to set up the National Paid Leave & Medicare Credit. Just ensure you have followed all the steps and you can rest assured that your setup is correct. 

 

To use the changes from this article you will need to use the new payroll items in place of their normal pay type or salary on your checks going forward. If you need anything else, just leave a reply. 

Jvit
Level 2

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Thank you, however, I DID follow the steps and my original comment stands.  I have set it up and it doesn't appear as an item when I'm creating a paycheck and the CREDIT is not addressed in the article with respect to "medicare"

Steve_C
QuickBooks Team

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Hey Jvit. I understand the frustration you're going through so I want to ensure we're on the same page. Are  you referring to the National Paid Leave & Medicare Credit for the FFCRA ?  If so, the section directly above Step 4: Set up a new tax item covers setting this up.

 

If this isn't what you meant please let me know so I can get down to the bottom of the issue for you. 

Jvit
Level 2

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Ok we are supposed to be taking a credit against our deposits for federal withholding and I get how to pay an employee and receive a credit.  What I don't get is how to set up "National Paid Leave - Medicare"...  First of all why would the rate be zero?  Secondly, after I do the payroll the Covid-19 expense account does reflect "National Paid Leave - Medicare". 

When paying an employee, how do I address "medicare" for both employee and employer?

ScrappinPeg
Level 3

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Trust me Jvit, I am EXTREMELY frustrated with this process.  In addition to my comment above, I spent another 3.5 hours on the phone today with QB (was finally escalated to a manager).  Unfortunately, as we wait for more updates, we have to do things manually.

Once you set up the National Paid Leave Credit - Medicare (when setting up the payroll item, we found it was best to put the percent of .0145 in the the upper block of the Default and Limit page) you need to make sure that it is also added to the employee's payroll information.  Talking with one of the managers at QB, for now, when you run payroll, you need to review each check that was affected by the sick leave and under Other Payroll Items, use the drop down arrow to find your NPLC-medicare.  It will automatically populate the .0145 in the rate amount; tab over to quantity and enter the gross National Paid Leave wage.  This will automatically calculate the amount for Medicare under the company summary on the NPLC - Medicare line.

When you go to pay your Federal and Fica Taxes you need to offset the liability account for the full amount of the check  on the first available line of the payroll liability tab of the check, which essentially makes the check a $0 check and tracks the credits in the National Paid Leave Credit Liability.  For now this is JUST a tracking system.  They are still working on how to clear the liability account by the end of all of this.

Hang in there, as frustrated and irritated as we all are, can you imagine the tech support at QB who cannot clearly answer our questions because they do not truly know either?

FYI, The directions that were added to handle setting up the medicare credit are not complete, it skipped a page. However, in the directions it says to make sure that the liability and expense account on the Agency for company paid liability page both are directed to the expense account.  I do not agree with this because it negates the credit in the expense, but the manager kept assuring me that this is how it will be for now until they can get this whole situation more refined.

Just as I donot agree with how they are handling the employer SS amount on the leave wage, I am just trusting that this all comes together in the end.  Meanwhile, start a spreadsheet with information to track the credits outside of QB, just in case - see attached.  

I hope this helps.  I am done worrying about how this is all going to come together.  The government is not going to come after us for unpaid taxes during this time.

Jvit
Level 2

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

ScrappinPeg.  Thanks for your input.  Yes, extremely frustrating and time-consuming!

About SS - employer -- see my other response - that according to my research, the employer doesn't need to pay it. 

About medicare -- are we supposed to pay it and then take the credit?  I don't understand why they don't treat it like Social Security - employer (where it's not paid in the first place)...

ScrappinPeg
Level 3

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Jvit,

My research shows that we will get credit for both employer and employee share of both social security and medicare taxes, federal taxes, and gross pay of sick leave, not just the employer share. Per IRS IR-2020-57, March 20, 2020 "When employers pay their employees, they are required to withhold from their employees' paychecks federal income taxes and the employees' share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS. Under guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS. The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees."

 

I also agree and argued yesterday that the medicare should be handled the same way as SS OR calculated both taxes like normal and then add an adjustment to handle the credit for everything.  As FC Boookkeeper, QB user, and payroll administrator for over 35 years, it is just cleaner to make sure ALL figures are showing somewhere, but QB continues to tell me this is the way it is to be done, for now.

Mellane
Level 4

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

@ScrappinPeg @Jvit - First of all thank you for your posts. I am right there with you regarding the frustration and lack of pragmatism in the way these items have been set up in QB.  I concur 100% with your set ups and am unclear on how the credits will be tracked accurately, and therefore am also tracking them manually in parallel. That said, I know this post is about the tax credits, but I wanted to just point out that I am also tracking the health plan expenses on my manual spreadsheet, as I did not see that on the sample you shared. :)

 

"The credit also includes the amount of the Eligible Employer’s share of Medicare tax imposed on the qualified sick leave wages and any qualified health plan expenses allocable to those wages. Qualified health plan expenses are amounts paid or incurred by the Eligible Employer to provide and maintain a group health plan to the extent that the amounts are excluded from the employees’ gross income under section 106(a) of the Internal Revenue Code. The qualified sick leave wages are not subject to the employer portion of social security tax."   

 

ScrappinPeg
Level 3

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Mellane, 

You are right, I did not include that on the sample mainly because we do not offer health care.  

I thought I remember reading early in the process that Employer Share of Retirement funds were also to be credited.  But I cannot seem to find that information again.  Was I dreaming or did someone else read that?

Mellane
Level 4

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

@ScrappinPeg  & Intuit Pros:

I did a bunch more research but did not find anything on the employer contribution to 401K.   But, I ended up finding more information about the "allocable health care expenses" which threw me for a loop... based on what I am reading, it appears that the allocable health care expense is NOT just the Employer Share??  See below.  Based on this information, I am unclear about what "amount" I need to enter for the payroll item "National Paid Leave - Health Premium"... Employer Share (allocated) or Total Premium (Employee + Employer Shares, allocated)??  

 

Here is what IRS states:  "An Eligible Employer may claim a fully refundable tax credit equal to 100 percent of the qualified sick leave wages (and allocable qualified health plan expenses and the Eligible Employer’s share of Medicare tax on the qualified sick leave wages) it pays."

 

And also:

31. Does the amount of qualified health plan expenses include both the portion of the cost paid by the Eligible Employer and the portion of the cost paid by the employee?

The amount of qualified health plan expenses taken into account in determining the credits generally includes both the portion of the cost paid by the Eligible Employer and the portion of the cost paid by the employee with pre-tax salary reduction contributions. However, the qualified health plan expenses should not include amounts that the employee paid for with after-tax contributions.

 

https://www.irs.gov/newsroom/covid-19-related-tax-credits-determining-the-amount-of-the-tax-credit-f...

Mellane
Level 4

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

@Jvit @ScrappinPeg 

Perhaps this will help - I looked at the tax items that are checked and not checked for these payroll items, and the SS Employer is NOT checked.  So that means that tax is not applied to these payroll items.

 

As for the pay it and then later retain it/apply credit... maybe it is a cash flow thing?  Regardless, consistency would be helpful!

Mellane
Level 4

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

@ScrappinPeg 

I don't think we get a credit for any employee paid Federal taxes (Federal Withholding, Employee SS and Medicare).  We only get credit for our (Employer)  SS, Medicare taxes.  What I understand is that we can apply our credits (the sum of our 100% of sick leave wages plus Employer SS plus Employer Medicare) against the amounts we have previously withheld from employees and now owe to Feds for Federal Withholding, Employee SS/Employer SS, Employee/Employer Medicare, thereby reducing our tax obligation.   So the govt is paying us back for the sick wages we paid, and refunding us the SS and Medicare taxes we paid for those wages, but the employees are still paying taxes on those sick wages. Make sense?

ScrappinPeg
Level 3

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Yes, I realized that as well, but QB told me to leave it the way it is that continuous updates will eventually fix.

Hilary9
Level 3

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

The Medicare credit is still not calculating on the Sick Leave. Has there been a solution posted for this? I can't find anything in the community past May 2

AileneA
QuickBooks Team

FFCRA credit for Employer portion of Medicare tax on Sick Leave is not being applied or calculated

Hi there, @Hilary9

 

As of this moment, we don't have a specific time-frame to when it will be resolved. Rest assured, our software engineers are working hard to resolve this issue permanently.   

 

To ensure you'll get an update about the resolution status, I recommend reaching out to our Technical Support Team. They have to collect personal data to add your company and product to the list of affected users. We'll be sending you updates via email once we get this sorted out and I'll also keep this thread on track.  

 

Also, I want to ensure your issue gets prioritized and addressed on time, thus I'll be providing this resource for the support hours. It contains the time on when the support is available, depending on your type of subscription. Just go to the QuickBooks section of this article for more info: Contact QBDT support.     

 

 Here's how to contact our support team:    

 

  1. Sign in to your QuickBooks  company.
  2. Go to Help (?).
  3. Select Contact Us.
  4. Enter your concern, then select Search.
  5. Choose a way to connect with us. Message an agent or Get a callback.

 

 

 

 

 

 

 

Due to the outbreak, we have limited staffing and have reduced our hours to 6:00 A.M. -6:00 P.M. PT Mon-Fri and some products will only have chat support during this situation.  Rest assured, we will resume normal hours as soon as possible.       

 

Please don't hesitate to reach back out to us if there's anything else you need. I'm  always here to help. Have a good one!

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