Information for COVID-19 Changes

May 15, 2020 Payroll Tax Update and Covid-19 eligible sick pay

The following instructions are related to the May 15, 2020/May 10, 2020 Payroll Tax Update.

US Social Security Employer exemption for FFCRA Sick

This Tax Update contains changes related to FFCRA Sick Pay. If you have employees entitled to this type of pay, you will need to create the following new Income factors for wages required to be paid under the Emergency Paid Sick Leave Act (ESPLA) as enacted under the FFCRA. This Act requires employers with less than 500 employees to provide paid sick leave to employees unable to work or telework after March 31, 2020, and before January 1, 2021 due to reasons outlined below.

Create one or both of the following Income Factors to implement these changes:

COVIDSICK

In these circumstances, you are entitled to a maximum of $511 per day, or $5,110 total over the entire paid sick leave period.

  1. Are subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. Have been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  3. Experiencing symptoms of COVID-19 and are seeking medical diagnosis. This falls under the Emergency Paid Sick Leave Act.

COVIDCARE

In these circumstances, you are entitled to compensation at 2/3 of the greater of the amounts above at a maximum of $200 per day, or $2,000 over the entire two week period.

  1. Caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  2. Caring for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons;
  3. Experiencing any other substantially-similar condition that may arise, as specified by the Secretary of Health and Human Services

This Income must be subject to US SS and any other taxes related to this sick pay. Once you create this Income factor, apply it to eligible employees.

If you previously created an Income for this type of sick pay under a different name, you should change the Income name to COVIDSICK and/or COVIDCARE. In order for this change to be applied to eligible sick pay, it must be called COVIDSICK or COVIDCARE in all caps.

In order to apply the US Social Security employer side exemption to eligible sick leave, please follow these instructions.

  1. Close any open pay periods in Payroll/Close Pay Period Checklist.
  2. Go to Payroll/Configure/Income and click New.
  3. Enter COVIDSICK or COVIDCARE in the Name box.
  4. At Earnings subject to, click the notepad and select any taxes this pay should be subject to. Make sure to include US SS.
  5. Click OK and Save changes.
  6. Go to Payroll/Configure/Employees.
  7. Click on an eligible employee.
  8. Click New and assign the new Income called COVIDSICK or COVIDCARE.
  9. To check that you have set up the Income correctly, after you run Calculate Payroll go to Payroll/Print/Payroll Register and check the box next to Show employer contribution?
  10. Click Preview or Print.
  11. The amount listed on the US SS (Employer) line should be blank.

If you previously created an Income for eligible Sick Leave but called it something else, please follow these instructions.

  1. Close any open pay periods in Payroll/Close Pay Period Checklist.
  2. Go to Payroll/Configure/Income.
  3. Click on the name of the Income factor you created.
  4. Change the name to COVIDSICK or COVIDCARE.
  5. Make sure this sick leave is subject to US SS.
  6. Click OK and Save changes.

If you previously ran payrolls that included FFCRA sick pay and the employer side of US SS was calculated, the system will calculate the difference and apply it to the next payroll that includes COVIDSICK or COVIDCARE pay for any employees. If you will not be running any payrolls that include this sick pay due to the government mandated qualified leave threshold, we recommend that you void any previous payrolls that included this sick pay and recalculate payroll with this new Income. The amount of the payroll checks issued to employees will be the same.

If you have questions or need assistance with the above information, please send us a Problem Report by going to Help/Submit Problem Report. If you are an employee subject to the Railroad Retirement Tax Act, please contact us.

IRS Information related to Sick Leave:

https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs

https://www.irs.gov/coronavirus/new-employer-tax-credits

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-paid-sick-and-paid-family-leave-overview