Families First Coronavirus Response Act
On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was passed into law in the United States of America. This new emergency paid leave will go into effect on April 1, 2020 and go through September 30, 2021. It will affect most companies in the United States with fewer than 500 employees. It is important for you to fully understand the new Act and how it will affect your organization. Here are a few resources to help you learn more about it:
TRAXPayroll is ready to help you, as the employer, recognize immediate tax relief for gross wages paid in accordance with the new Families First Coronavirus Response Act ("FFCRA"). This is accomplished by reducing the Federal, Social Security, and Medicare taxes collected on your Cash Requirement.
In Step 2 of run payroll, enter the gross amount of paid leave for the employee and select the applicable additional pay type option from the dropdown:
Emergency Paid Sick Leave Act (Form 7200 Line 2)
- FFCRA Paid Sick Leave* (Payable/Taxable)
- FFCRA Unpaid Sick Leave* (Non-Payable/Taxable to handle cash payments)
Emergency Family and Medical Leave Expansion Act (Form 7200 Line 3)
- FFCRA Paid Family Leave* (Payable/Taxable)
- FFCRA Unpaid Family Leave* (Non-Payable/Taxable to handle cash payments)
When you have completed your payroll entries, proceed to Step 3 of run payroll by clicking Calculate Payroll. On this final step, you may review your Payroll Summary and Cash Requirement reports to see the amount of tax to be collected less the credit.
In the event that your company's Federal tax liability (Federal Withholding, Social Security, and Medicare) results in a credit on the payroll, TRAXPayroll will complete and submit Form 7200 to the IRS for a fast credit to be sent to your company. Please note you cannot fill out and submit Form 7200 on behalf of your company. It is required that TRAXPayroll submits this form for you.
Please note that there are several things to keep in mind with these pay types:
- *A cap amount warning will appear if an employee(s) exceeds the highest annual limit allowed for each pay type.
- If you create a Time Off Type to track this in BambooHR, it will not show as used paid time off on the employee's pay stub because the amount of leave is not being tracked as used paid time off in TRAXPayroll. Instead, it will be listed as an additional pay amount under the new pay type. (See screenshot below.) Please be sure to uncheck the box for "This is a paid time off type" when you create the time off type in BambooHR so you do not double pay your employees for this leave.
- You cannot enter a negative amount for any of these pay types.
- Previous paychecks cannot be voided if they have included any of these pay types.
To avoid overpayment, you may reduce the employee's hours or salary rate in Step 1 by the amount that is being paid out using the FFCRA credit.