Updated March 12, 2020
The Families First Coronavirus Response Act (FFCRA) allows many small businesses to provide paid sick and/or family/medical leave in response to COVID-19. While it's no longer required, if choose to offer it to your employees, you may then be eligible to receive tax credits for those leave wages paid. We'll show you how to keep track of these FFCRA tax credits right in your OnPay account.
What we'll cover
- How does OnPay handle my FFCRA related tax credits?
- How to view a summary of tax credits for FFCRA paid leave in OnPay
- Redeem a remaining credit balance from the IRS and record it in OnPay
Looking for information on how to pay employees for FFCRA related leave? See this article for instructions >
How does OnPay handle my FFCRA related tax credits?
When you make FFCRA leave payments to employees directly in OnPay and earn tax credits, we keep track of those credits and apply them automatically towards eligible payroll taxes.
After we apply the credit towards reducing your 941/943 tax liability, it is possible there may be some credit remaining. By default, OnPay will continue to reduce the tax payment of your future pay runs until all of the remaining credit is used.
If you would prefer to receive the remaining credit via refund, you can opt to file a Form 7200 with the IRS directly. You will need to report in OnPay the refund amount so we know to reduce the value of credit remaining (see more information below).
How to view a summary of tax credits for FFCRA paid leave in OnPay
In your dashboard left menu, go to COVID-19.
You may need to scroll to find the FFCRA credit summary.
Here, you can see breakdowns of your employer tax credits and usage, including:
- Credit balance: The value of FFCRA credit funds that have not yet been redeemed.
- Total credits: The cumulative value of tax credits attributed to your account, based on FFCRA paid leave made to employees.
- Total payment reductions: The value of tax credits that OnPay has already applied towards a reduction in your 941/943 tax liability.
- Total redeemed via refund: If you choose to redeem any remaining credit by submitting a Form 7200 for a refund direct from the IRS, you'll need to report that value in OnPay. We'll keep a summary of the refund value here for your records.
To view a more detailed summary of the credit balance and usage, click View Details.
This will generate a line-item detailed report summarizing your FFCRA related tax credits and usage.
Redeem a remaining credit balance from the IRS and record it in OnPay
After OnPay automatically applies your tax credits towards your 941/943 liability, it is possible you may have some remaining credit value. No action is required; we will continue to reduce the tax payment for your future pay runs until all of the remaining credit balance is used.
However, you also have the option to redeem the remaining balance by refund from the IRS. To do this, you will need to file a Form 7200 directly to the IRS to claim the remaining value.
If you do this, you'll need to report it in OnPay so we have accurate records of your remaining credit balance.
In the COVID-19 section in OnPay, you'll see a section titled Redeem Credit Using a Refund from the IRS.
From there, click the Redeem with a Refund button.
A dialogue window will appear. Enter the value of the refund you claimed when submitting Form 7200 to the IRS, and click Save.
Your remaining credit balance will update to reflect the value of these funds redeemed via refund.
Keep up to date with all of this and more by checking our COVID-19 Resource Center. We’re updating it regularly as there are new developments and government guidance.
Please note that as COVID-19 legislation is changed or extended, always refer to IRS guidance for the most up-to-date information.
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