COVID-19 Payroll Tax Relief

The Families First Coronavirus Response Act, or FFCRA, set certain entitlements for employees regarding COVID-19 related paid leave. Included in the recent legislative changes are a variety of tax relief options and, as it relates to payroll taxes, there are both options to claim credits and to defer tax payments.  The tax credits available to claim can be applied against an employer's federal payroll tax liability payments; specifically, social security, Medicare, and federal income tax.  

For Zenefits Payroll customers, we are providing new earning types that will allow for less manual tracking of tax-credit-eligible leave payments. Amounts entered into these new COVID-19 leave earning types will automatically apply as a credit against all social security, Medicare, and federal income tax liability within the same calendar quarter, when approved.

Credits resulting from the COVID-19 Emergency Leave earnings, entered by administrators each payroll, will be held in the Zenefits system and can be applied against any Federal 941 tax liability calculated for pay dates after April 1st, 2020.  With administrator approval, these amounts will apply as a credit against all social security, Medicare, and federal income tax liability within the same calendar quarter.

Any remaining credit after a pay run will be held in the system and applied to future payruns until the credit is exhausted or the calendar quarter is closed, whichever comes first. Eligible COVID-19 leave pay related tax credits will display on your pay run approval page and payroll reports.