Information for COVID-19 Changes

C21 Recommendations for recording Eligible Paid Sick Leave

We hope you are keeping safe and healthy. The federal government has released some guidance regarding the recently enacted Families First Coronavirus Response Act. This law requires employers with less than 500 employees to compensate employees with paid sick leave apart from their regular sick pay if they are affected by state or city enacted quarantines. Qualifying sick pay starts April 1, 2020 and lasts until December 31, 2020. Employers with fewer than 50 employees may be exempt from these requirements.

According to the IRS:

Eligible employers are entitled to receive a credit in the full amount of the required sick leave and family leave, plus related health plan expenses and the employer’s share of Medicare tax on the leave, for the period of April 1, 2020, through December 31, 2020.  The refundable credit is applied against certain employment taxes on wages paid to all employees. 

The Emergency Paid Sick Leave Act applies to employees that are experiencing the following conditions. Please check the IRS website for more information or consult your accountant.

  • Government quarantine related to COVID-19
  • Caring for individuals subject to COVID-19 quarantine
  • Caring for children under the age of 18 due to school closures due to COVID-19

To offset the cost of this required sick pay, the federal government will provide relief in the form of Tax Credits which can be retained in the amount of payroll taxes due now and then the difference refunded at an as yet to be determined time. To determine the amount you can retain, consult your accountant or the IRS for more information. The Taxes Activity Report in Payroll/Print/Taxes Activity is a useful tool to help determine these amounts.

The Tax Credit compensation amounts for paid sick leave are as follows. Please check the IRS website or consult an accountant if you are unsure how to compensate your employees.  

  • Employees quarantined due to COVID-19 related illness are entitled to up to $511/per day for a total of $5,110 and up to 80 hours of leave.
  • Employees caring for individuals quarantined due to COVID-19 illness or children if schools are closed are entitled to up to two-thirds of wages up to $200/per day for a total of $2,000 up to 80 hours. 

    To keep track of this paid sick leave, we recommend that you install the most recent Payroll Tax Update and follow the instructions provided here.

According to the IRS:

The Eligible Employer is entitled to a fully refundable tax credit equal to the required paid sick leave. This tax credit also includes the Eligible Employer’s share of Medicare tax imposed on those wages and its allocable cost of maintaining health insurance coverage for the employee during the sick leave period (qualified health plan expenses). The Eligible Employer is not subject to the employer portion of social security tax imposed on those wages.  (Eligible Employers subject to the Railroad Retirement Tax Act are not subject to either social security tax or Medicare tax on the qualified sick leave wages; accordingly, they do not get a credit for Medicare tax.)

We will be releasing additional information regarding these changes shortly. For now, if you have eligible employees, use the Payroll/Print/Payroll Register report to determine the employe amount. Check the box Show employer contribution? to see the amount due for these employees. You can then deduct this amount when you pay your 941 taxes.

IRS Information related to Sick Leave: