COVID-19 Types of Earnings

In response to Families First Coronavirus Response Act and the American Rescue Plan Act (see below), MPAY has added the following earning types to the system: 

 

FFCRA Types of Earnings:

 

  • CRA Sick Leave - leave paid to an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis that a business wants the tax credit on.
  • CRA Dep Care - leave paid to an employee who is caring for someone with Coronavirus, or is caring for a child because the child's school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus that a business wants the tax credit on.
  • CRA Child Leave - leave paid to an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus that a business wants the tax credit on.

All three CRA earning types have been exempted from employer social security.

 

Paid sick and family leave for the following three codes have been extended to allow use until the end of 1st quarter of 2021. The total limit has not been extended - all usage from 2020 carries over to 2021 in determining how much available leave is left per employee. This did not extend the mandate into 2021 - it will be voluntary for an employer to provide leave in 2021 but still 100% covered by tax credits.

 

  • Employee Retention - a broad based refundable tax credit designed to encourage employers to keep employees on their payroll. The credit is 50% of up to $10,000 in wages paid by an employer whose business is fully or partially suspended because of COVID-19 or whose gross receipts decline by more than 50%. The 10,000.00 limit each quarter for the Retention Credit includes the Qualified Health Plan Expense. When adding both the Retention Credit to the employee and the Qualified Health make sure both added together does not exceed the limit.

 

The employee retention credit has been extended to allow use until the end of 2nd quarter 2021. The percentage of wages that is considered creditable against federal taxes has been increased from 50% to 70%. The $10,000 limit of qualifying wages has been changed from all quarters to each quarter - allowing a maximum of $7,000 per quarter as a credit now. The employer's qualifying year to year drop in gross receipts has been dropped from 50% to 20% and may use prior quarter gross receipts to determine o Increases the threshold for determining if qualified wages are only for missed wages or for all wages from more than 100 employees to more than 500 employees. Employers with PPP loans now qualify for the Employee Retention.

 

  • Memo CRA Ins Cr - to record insurance related expenses that are also eligible for the tax credit.

 

The following memo earn types have been added to the system which can be used to record additional amounts you need included for the above listed FFCRA earn types. This is for companies that may have paid the new leave using a different earn type and then applied for credit using the form 7200 (or did not apply for credit). These new memo types will be included on the 941 and will go towards the annual limit but they will not generate any automatic credits during payroll processing.

 

The following memo earning types have been added to the system:

  • Memo CRA Dep - record prior to CRA Dep Care wages.
  • Memo CRA Sick - record prior CRA Sick Leave wages.
  • Memo CRA Fam - record prior CRA Child Leave wages.
  • Memo CRA Fam Exp - record prior CRA Fam Health Expense
  • Memo EEClosed short for "employee" Ret Cr - record prior EE Retention Credit wages
  • Memo EE Ret Exp - record Health Plan Expense on EE Retention credit

 

These earning types can be used on earning codes to track specific coronavirus leave payments being made to employees.

 

For information about the new Families First Coronavirus Response Act, please refer to the following IRSClosed Internal Revenue Service link:

 

https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

 

 

IMPORTANT:

  • These earning types are used to track payments to employees that are eligible for the specific tax credits indicated in the IRS information provided above. They are not for other portions of Coronavirus legislation that is being implemented. These are only for the leave payments eligible for tax credits.

 

 

ARPA Types of Earnings

 

  • ARPA Sick Leave - American Rescue Plan Act Sick Leave. Wages paid for leave taken by employees who are not able to work or telework due to reasons related to COVID-19, including leave taken to receive COVID–19 vaccinations or to recover from any injury, disability, illness or condition related to the vaccinations.
  • ARPA Fam Leave - American Rescue Plan Act Family Leave. Wages paid to an employee who is unable to work or telework because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus that a business wants the tax credit on.
  • ARPA Dep Care - American Rescue Plan Act Dependent Care Sick Leave. Wages paid to an employee who is caring for someone with Coronavirus, or is caring for a child because the child's school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus that a business wants the tax credit on.

 

These tax credits are available for wages paid for leave from April 1, 2021, through September 30, 2021. These earnings are fully taxable.

 

The following memo earning types have been added to the system:

 

  • Memo ARPA Sick - record prior ARPA Sick Leave wages
  • Memo ARPA Fam - record prior ARPA Family Leave wages
  • Memo ARPA COBRA - American Rescue Plan Act COBRA Premiums
  • Memo ARPA InsS - ARPA Sick Leave Health Insurance Exp
  • Memo ARPA Dep - record prior ARPA Dep Care wages
  • Memo ARPA InsF - ARPA Family Leave Health Insurance Exp

 

 

For information about the new American Rescue Plan Act ARPA, please refer to the following IRS link:

 

https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paid-leave-due-to-covid-19