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COVID-19 Pay Types

 

 

What are the COVID-19 pay types that are supported by Zenefits?

 

The following are the COVID pay types that are supported in Zenefits. Note that you are responsible for calculating the amounts to be entered. The Zenefits system cannot do the COVID-19 calculations for you.

COVID-19 Time Off: used to record earnings paid to workers utilizing the COVID-19 Time Off requests in Zenefits.

  • COVID-19 Self Care - Time Off
  • COVID-19  Family Care - Time Off
  • COVID-19 EFMLA

The COVID-19 Self Care - Time Off and COVID-19 Family Care - Time Off types are available to be used in accordance with the Emergency Paid Sick Leave Act, or EPSLA. The COVID-19 EFMLA  type is to be used in accordance with the Emergency Family and Medical Leave Expansion Act, or EFMLEA. To understand the differences between when each of these types should be used, we recommend you look through this Department of Labor resource.

C19PayType1

COVID-19  Tax Credits: 

Used to record earnings paid to eligible workers to receive federal tax relief.

  • COVID-19  Employee Retention Expense
  • COVID-19  Qualified Health Plan Expense
  • COVID-19 FFCRA  Tax Credit

 

Contribution Categories:

 

In addition to the following contribution categories available for  COVID-19  credit calculation, Zenefits also supports two new contribution categories: 

  1. COVID-19  Family Care /EFMLA  - Qualified Health Plan Expenses - ARPA
  2. COVID-19  Self Care - Qualified Health Plan Expenses - ARPA

These new contribution categories support entering the  allocable  health expenses that can be claimed as part of the credits allowable for paid sick and family leave taken after April 1 , 2021. 

 

For health expenses  allocable  to leave taken prior to April 1 , 2021, use the following contribution categories: 

  1. COVID-19  Family Care /EFMLA  - Qualified Health Plan Expenses 
  2. COVID-19  Self Care - Qualified Health Plan Expenses 

Zenefits supports  COVID-19  COBRA Premium Assistance Credits under the new contribution category:

  1. COVID-19 COBRA Premium Assistance

C19PayType2


Note: Employers that wish to take advantage of any  COVID-19  tax relief credit options must make sure they understand:

 

  • Any limits to the amount of credits they can claim
  • Reporting requirements when claiming credits through payroll or other IRS Forms
  • Restrictions on an employer's ability to claim credits and seek other relief options

 

For more details see the IRS resources on Employee Retention Credit.

 

 

How to Use Self Care, Family Care, EFMLA, and FFCRA Tax Credit COVID-19 Pay Types

 

These pay types will assist in ensuring that leave is being taxed appropriately. Please note that the COVID-19 pay types do not have built in limits. It is your responsibility as the employer to track any limits in accordance with the FFCRA.

  1. Open the Payroll app from your Zenefits dashboard.
  2. Go to the Pay Runs tab from the top navigation bar.
  3. Select a draft run.
  4. Click Edit for a worker who is utilizing the COVID-19 leave.
  5. In the Earnings section, Add Earning.
  6. Select from the COVID-19 Earnings categories and Add.
  7. Next to the COVID-19 Earnings category in their pay stub, you can enter in the amount of wages the worker will be receiving.
    If you need guidance on the amount of earnings to include, the Department of Labor has provided these resources on the Calculation of Pay.
  8. Save.

 

 

How to Use Employee Retention and Qualified Health Expenses COVID-19 Pay Types

 

  1. Open the Payroll app from your Zenefits dashboard.
  2. Go to the Pay Runs tab from the top navigation bar.
  3. Select a draft run.
  4. Click Edit next to one of the workers listed.
  5. In the Contribution section, +Add Contribution.
    Note that will not affect your worker’s pay stub at all. It is simply the Zenefits system way of tracking how your company avails the credits.
  6. Select from the COVID-19 Credits and Add.
  7. Next to the selected COVID-19 credit, enter in the amount of the wages/health plan expenses you’ll be claiming.
    If you need guidance on the amount of wages or health plan expenses you can avail, the IRS has provided these resources on Employee Retention and Qualified Health Plan Expense data.
  8. The amount you enter in the Contribution will be used to calculate the credit amount, which is 50% of the qualified wages/expenses. The credit amount will be displayed on the next step, Approve Run.
  9. Save.

Note: Employers that wish to take advantage of any COVID-19 tax relief credit options must make sure they understand:

 

  • Any limits to the amount of credits they can claim
  • Reporting requirements when claiming credits through payroll or other IRS Forms
  • Restrictions on an employer's ability to claim credits and seek other relief options

 

For more details see the IRS resources on Employee Retention Credit.

 

How can I view the credits that I’ve entered for my company?

 

You can see what amounts you ’ve entered in qualified wages and health expenses in the All In One report. The credits resulting from your entries are explained in these IRS resources on Qualified LeaveQualified Retention and Qualified Health Plan Expense. It is each employer’s responsibility to ensure they are entering only the amounts that qualify for the corresponding credits.

 

 

I entered the wrong amount in for the Qualified Health Plan Expense or Employee Retention credit. Can you help?

 

If you ’ve entered an incorrect amount for any entries in payroll, you’ll need our support teams to help you correct the mistake. If the error impacts a tax period that has already been filed with the IRS, amendments to the impacted returns may also be required.

 

 

Why am I entering the Qualified Health Plan Expense/Employee Retention credit amount in the Contribution? Won’t this affect my employee?

 

No, this will not affect your employee or be displayed to them at all. In order to expedite making the COVID-19 credits available to our customers, Zenefits relied on existing framework within our system. This means that in order to enter the credits for Employee Retention and Qualified Health Plan Expense, you'll need to use the Contribution section of an employee's pay stub that was previously reserved for employer contributions to the employee.

contribution section of pay stub


Note: Employers that wish to take advantage of any  COVID-19 tax relief credit options must make sure they understand:

 

  • Any limits to the amount of credits they can claim
  • Reporting requirements when claiming credits through payroll or other IRS Forms
  • Restrictions on an employer's ability to claim credits and seek other relief options

 

For more details see the IRS resources on Employee Retention Credit.

 

Now that I can enter Employee Retention and Qualified Health credits into payroll, how can I retroactively claim them?

 

The entry options that Zenefits has provided allows employers to enter both qualified wages and health credits for any applicable second quarter payments and for any qualified employee retention or health expense payments made during the allowable March time frame.

catchup march types


Note: Employers that wish to take advantage of any COVID-19 tax relief credit options must make sure they understand:

 

  • Any limits to the amount of credits they can claim
  • Reporting requirements when claiming credits through payroll or other IRS Forms
  • Restrictions on an employer's ability to claim credits and seek other relief options

 

For more details see the IRS resources on Employee Retention Credit.

 

FFCRA Wage Reporting on the W-2

 

 

COVID-19 Codes in Box 14

 

The IRS requires employers to provide the amounts paid to employees as qualified sick leave wages or qualified family leave wages under the Families First Coronavirus Response Act.  To help employers meet this requirement, Zenefits will display these wages in Box 14 per the IRS recommendations for the three specific wage types:

 

  • C19 SLW511: Sick leave wages subject to the $511 per day limit because of care an employee required
  • C19 SLW200:  Sick leave wages subject to the $200 per day limit because of care an employee provided to another
  • C19 EFLW: Emergency family leave wages

The purpose of providing this information to employees is to provide self-employed individuals who also receive wages or compensation as employees with the information they need to properly claim any qualified sick leave equivalent or qualified family leave equivalent credits, for which they are eligible, when they file their personal tax returns.  Individuals who are not self-employed will not need to report this information.

 

American Rescue Plan Act, FFCRA, & CARES Act Extensions

 

The following FFCRA & CARES Act timeline updates to extensions for 2021 have been updated in Zenefits: 

 

American Rescue Plan Act COBRA Credit Subsidy

 

The American Rescue Plan Act (ARPA) added to the credits allowable for COBRA premiums. Previously, employers could only claim the credits via the Employee Retention Credit (ERC) option under the CARES Act. Since the ERC has limits on the allocable expenses that can be claimed, employers may be able to get tax credits for the entire amount they've paid for COBRA coverage. ARPA allows credit for 100% of eligible expenses as follows:

  • The credit is applied against the employer portion of Social Security taxes.
  • Any excess credit (eligible credit amount beyond the employer’s Social Security liability for the quarter) is then refundable.
  • Similar to other credits, this credit can be advanced via form 7200. (Note that Zenefits does not currently support this and customers are encouraged not to use form 7200). 
  • The credit can be applied against federal 941 tax deposits for the quarter in which the credit is claimed via form 941.
  • Employers can claim the credit under the  ERC or COBRA subsidy, but not both. 
  • The credit is effective for payrolls with a check date on or after April 1, 2021. 

 

American Rescue Plan Act FFCRA Amendments

 

The American Rescue Plan Act (ARPA) modified the taxation of qualified sick/family leave credits under the Families First Coronavirus Response Act  (FFCRA).

ARPA also modified the calculation of the credit for the purposes of retaining federal 941 tax payments.

  • The previous calculation is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100% of the employee's regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee's regular rate of pay. The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer's share of Medicare taxes paid on the wages (up to the respective daily and total caps).
  • Per the IRS, the new calculation (post 4/1) is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100% of the employee's regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee's regular rate of pay. The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer's share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).

 

Has the taxation for the existing Covid related leave earning types been updated in Zenefits?

 

The taxation for the three existing leave earning types has not been changed. 

Three new earning types will be added in Zenefits Payroll to handle the proper taxation and credit treatment.

 

How does Zenefits support the COBRA Premium Assistance credit as part of the American Rescue Plan Act?

 

Currently, employers are able to claim credit for the COBRA Premiums if they are entered into Zenefits payroll as qualified health expenses. The credit is applicable for the purposes of an employer claiming Employee Retention Credits (COVID-19  Employee Retention - Qualified Health Plan Expenses contribution type) for any taxable period through December  31, 2021.  

The ability to claim the full COBRA premium credit amount available via Employee Retention Credits may be limited through the eligible expense limitations and caps that are applicable to the Employee Retention Credit. Employers should review the IRS instructions and consult with their tax advisor to determine whether claiming credit for COBRA premiums paid by employer is appropriate for them.

In addition to claiming the COBRA premium credit through the Employee Retention Credit under the CARES Act, Zenefits has also created a new employer contribution pay type specifically for the new COBRA Premium Assistance Credit authorized under the American Rescue Plan Act (ARPA). This new contribution pay type is called  COVID-19 COBRA Premium Assistance. Contributions entered in this new pay type will allow the COBRA Premium Assistance credit to be calculated correctly and reported on the IRS form 941.

There is no cap to the amount of qualifying premiums that may be entered under this credit.

Any COBRA premium entries made via the existing COVID-19  Employee Retention - Qualified Health Plan Expenses contribution type will be reported as part of the aggregate Employee Retention Credit claimed on an employer’s Form  941, and will not be reported separately.  The new contribution type for the COBRA Premium Assistance Credit will be reported as a separate line item on an employer’s Form  941.  

Employers should consult with their  tax advisor on which credit is appropriate for their needs.  Employers remain responsible for any related  record-keeping  required by the IRS for audit purposes.

 

Will the new COBRA Premium Assistance Credits apply against my 941 deposits each payroll?

 

For the second quarter of 2021, these entries will be reported on the Form  941  and refunded directly from the IRS.  

The new COVID-19 COBRA Premium Assistance contribution type is available in Zenefits Payroll. Customers are able to enter the amounts into payroll and have the credits applied against their Federal  941  deposits for the quarter in which they are entered.

 

How do I claim COVID-related relief credits through Zenefits Payroll?

 

To claim any COVID-related relief credits in Payroll to be included on your quarterly Form 941 filing, create an off-cycle pay run and add the qualified credits under the Employer Contribution section for each applicable employee.

Once the off-cycle pay run has been created for the impacted employee(s), add the credits by following these steps:

  1. Click on the impacted employee’s name to expand their pay stub in the pay run.
  2. Scroll to the Employer Contributions section and click Add Contribution.
  3. Select the applicable pay type, enter the amount, and click Save. Complete this step for each impacted employee.
  4. Once you have selected the pay type and amount for each employee, click Finish Edit.
  5. Finally, review your Run Summary and click Approve Run.

Once the off-cycle pay run is approved, the credit will be recorded on the associated quarter’s Form 941. 

Note: For the purpose of keeping track of your relief credits, we recommend that you use an off-cycle pay run each time. 

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