IRS releases FAQs on tax credits for paid leave

 

The IRS recently released four new FAQs regarding qualified sick and family leave wages paid to employees and self-employed individuals under the Families First Coronavirus Response Act of 2020 (FFCRA) for leave paid prior to April 1, 2021, and the American Rescue Plan Act of 2021 (ARPA) for leave paid after March 31, 2021.

The FAQs instruct that Form W-2c, Corrected Wage and Tax Settlement, may need to be furnished to certain employees to correct the amount of sick and family leave wages reported in Box 14 of the employees’ 2020 or 2021 Forms W-2. In addition, certain self-employed individuals who receive Forms W-2c from other employers may need to recalculate the credit on the applicable Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals—and, if the amount of the qualified leave equivalent credit has changed from the amount claimed on the individual’s originally filed Form 1040, the individual must file a Form 1040-X, Amended U.S. Individual Income Tax Return, with the corrected amounts from the Form 7202.

The new FAQs are as follows:

  • Question 54g: Special Issues for Employers: Other Issues (FFCRA)
  • Question 65c: Specific Provisions Related to Self-Employed Individuals (FFCRA)
  • Question 98a: Special Issues for Employers: Other Issues (ARPA)
  • Question 116a: Specific Provisions Related to Self-Employed Individuals (ARPA)
 

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