WASBO Webinar: 941 Changes Related to (COVID-19) Tax Relief

Webinar Recording from October 13, 2020

WASBO is pleased to offer a recording of the free one-hour webinar held on Tuesday, October 13, to help school districts unpack the 941 changes related to (COVID-19) Tax Relief. Significant changes were made to Form 941 to allow for the reporting of new employment tax credits and other tax relief related to COVID-19. Brian Adesso, Director of Business Services from Menasha Joint School District and Jeff Dvorachek, Director of Tax and Partner from Hawkins Ash CPAs reviewed the changes that are due on Oct 31, 2020 for Form 941. View the presentation materials.

We encourage you to take advantage of this free recording. Business Managers, bookkeepers, payroll professionals and those who are responsible for completing Form 941 should plan to view this recording before filling out this form. We will follow-up with the Q&A as soon as possible.

Again, these changes to Form 941 are due on October 31, 2020!

 

WASBO Webinar: 941 Changes Related to (COVID-19) Tax Relief – October 13, 2020 – Q & A

  1. Has there been any talk of extending the FFCRA beyond 12/31/20?  Not that we have heard.
  2. Is the 30 days calendar or working days Calendar Days
  3. Should it be a doctor’s note, or can it be school nurse or county nurse note? Not answered. Any medical professional will work. The employee would not need to provide a note, the employer is only required to get the name of the medical professional.
  4. Is the FFCRA 80 hours and the family leave 80 hours separate leaves? Runs concurrently
  5. 10 WEEKS ONLY FOR childcare day card? The EPSLA-Other is for up to 10 weeks to stay at home with a child.
  6. Does contact tracing ordered quarantine also qualify? Yes
  7. Does the closure of the daycare have to be specifically due to COVID? Not answered. Yes. COVID or a Government mandated closure due to COVID.
  8. Can we get a copy of the presentation to print certain pages as needed? Yes
  9. Will the employer eventually have to pay that 6.2 back? Not for the FFRCA sick pay or family leave. You would for the deferral which is different.
  10. Is the employer social security credit deferred or forgiven? It is forgiven for the FFRCA sick and family leave.
  11. Are School Districts eligible to not pay in FICA tax for the Emergency paid sick leave? Yes Clarified in 13 below. It is only the ER SS tax, not ER Medicare
  12. To clarify, the employer does not have to pay their portion of SS (6.2%) on those employees who are quarantined/out with COVID and receiving 10 days of pay? Correct
  13. Did he just say that School Districts don't have to pay (ever) SS tax on the FFCRA wages? Correct
  14. What if an employee left the district? Would the district be responsible for the amount to be paid in later? Yes, for the Employee SS deferral option the district would be liable for the payment.
  15. Does anyone using Skyward use two separate sick leave codes in time off to break out between COVID leave that is for employee vs other family members? Do you run it as a separate sick leave code or do you have different description codes in your time off to distinguish it. Menasha uses two different pay codes to keep track of the separate leave types.
  16. I have many employees out on exposure quarantine and have not had them complete a FFCRA request for leave I have been withholding ER Social security tax for these employees.  If they are out because of childcare or isolation I have not been withholding ER social security tax. Should I be stopping withholding ER social security taxes if they are on exposure quarantine?  If you want to take advantage of the FFRCA SS provision, then yes you would stop withholding the employer share of SS on the qualified leave portion.
  17. If the employee is using the EPSL to care for their children because the day care was closed, we can supplement the 2/3 pay with 1/3 paid sick leave correct? Do we withhold the SS from the sick leave portion of pay? Correct about the 1/3 pay and you would take SS from the 1/3 part not the 2/3 part.
  18. Does this apply to school districts? Yes
  19. 5a (1) and (2) should be subtracted from 5A, correct? Correct 5A+5a(i)+5a(ii)=total amount
  20. I thought 5a (ii) was for the 2/3 pay? You would record it on 5a(ii)
  21. 5a ii would be the 2/3 wages or max of $200 per day...correct? Correct Line 5a (ii) is for the Extended 10 weeks leave paid at 2/3rds wages. The first 80 hours, whether it’s reduced to 2/3rds pay or full rate of pay should go on line 5a (i)
  22. 5a ii would be the 2/3 wages or max of $200 per day...correct? Correct Line 5a (ii) is for the Extended 10 weeks leave paid at 2/3rds wages. The first 80 hours, whether it’s reduced to 2/3rds pay or full rate of pay should go on line 5a (i)
  23. Is group term life now required to be reported quarterly, or is this optional? It appears this is calculated on an annual basis, But if an employee leaves, the amount should be prorated for the time they are with the district. This amount would Be reported on the quarterly Form 941 in the quarter that they left.
  24. Is there a WUFAR code for the 6.2% employer SS tax credit on the Emergency Paid Sick Leave and Emergency FML Expansion Act?  Not that we know of right now.
  25. On line 5c....does that just include 5a amounts and NOT 5ai and 5aii? 5c should equal 5a+5a(i)+5(ii) plus any amounts not Included on line 5 due to the employee being over the Social Security limit.
  26. If we have already paid in the ER portion per payroll; we can just complete the 941 to have a credit issued? 941X or adjust it on a future 941 If the sick wages are recorded on the 941 correctly and the ER portion was paid in, the 941 will just show an overpayment. The overpayment can be refunded or applied to the next quarter. A 941-X is only necessary if the wage wasn’t recorded Correctly on the 941.
  27. So basically, other than not having to pay social security on the FFCRA pay... we get nothing to offset the costs of the FFCRA pay and benefits because we are a government employer. Correct
  28. Do we get credit for medical benefits for the days that we pay for epsl or fml? (i.e. a daily rate for those days?). No
  29. Line 13b is for the deferral only - nothing related to FFRCA? Correct
  30. If an employee is out because their spouse or child is waiting to get test results, would they qualify for the Emergency Sick Leave? Yes, as they would be quarantined
  31. Do the lines that should be $0 have to be filled in as $0 or can the lines be left blank? (19, 20, 21, 22) Either
  32. Any problems with me taking both the EE and ER on social security and just getting the 'overpayment' on the ER back as a refund? You would need to fill out a 941X or make the adjustment on Q4 941. There is no portion of the EE SS that qualifies as an “Overpayment." See 28 above.
  33.  Are people removing ER FICA during the payroll process from each individual or just a journal entry as a total? Don’t we have to include something on W2's? It will need to be reported on the W2 If the software doesn’t calculate the reduction in the ER portion correctly a journal entry may be necessary to adjust. ER FICA isn’t reported on the W-2, but the EE FICA is, and the sick leave pay will need to be reported either in box 14 or on a separate statement.
  34. Will school districts need to report on the W-2 the amount of wages paid under FFCRA, if we have not been able to collect any credits? We are not deferring any taxes Yes it will be required on the W2
  35. Will the employees see any impact on their social security benefits because of the amounts that were not paid by the employer? I assume the employee/employer benefits paid will be different amounts now? No, the federal government will be covering the amount of the reduction.
  36. If we record payroll ss taxes as normal on the employee’s payroll, can we keep track of the pay that we could save the 6.2% and record it to get the credit or does it need to be on their payroll info? You will have to report on W2 so at some point the report will have to match payroll.
  37. Do we need the employees to complete a certain form for the 1st 80 hrs? Menasha does just like FMLA paperwork.
  38. We've been paying the EE SS on the FFCRA wages because we can't get Skyward to work correctly. I'm planning to adjust the 941 and get the refund for these. Is this going to be ok? Yes, use 941X There is no refund for the EE portion.
  39. Do we have to separate payrolls for the FFCRA employees or can we do the math to show the amounts for the SS Credits? Menasha uses separate pay codes to keep track of the leaves
  40. Are school districts required to not pay the SS ER taxes on the sick leave wages? Or school preference? It is up to the district. Menasha is seeing around a $500 savings per payroll and this amount is increasing with each run. Just my opinion – I would expect since the sick leave wages need to be reported in box 14 or on a separate statement That these amounts need to tie out at year end from the 4 quarterly 941’s and the W-2’s. If the wages are reported correctly on the 941 then the overpayment will just be refunded. I don’t know why the school district wouldn’t want to receive the credit. As is stated in 43 below, the employees are not losing anything.
  41. Do you think the IRS is going to penalize school districts that pay in the employer 6.2% social security for the FFCRA wages? This is still a benefit for the employee regardless. In my opinion the IRS will have zero clue if you have people on this leave or not. Either way your employees are not losing anything. May be that my response in 42 is being over cautious. The SSA may not tie out the sick leave in box 14 to the 941’s.
  42. What about an employee with a second quarantine requirement, a new set of 10 days? Only one 10-day period allowed for the FFCRA Leave