TaxBandits Knowledge Base

What are Qualified Sick Leave Wages?

Qualified Sick Leave Wages refer to wages paid to employees who are unable to work or telework due to COVID-19-related reasons, such as:

• Experiencing symptoms of COVID-19.
• Being subject to a quarantine or isolation order.
• Being advised by a healthcare provider to self-quarantine.
• Caring for someone under such circumstances.

Under the Families First Coronavirus Response Act (FFCRA), employers were eligible to receive tax credits for these wages paid during applicable periods. However, employers can no longer claim COVID-19-related tax credits starting on or after the 2024 tax year.

When reporting qualified sick leave wages on Form 941 for prior tax years:

• Column 1 should reflect the total amount of qualified sick leave wages.
• Column 2 should show only 6.2% of the amount in Column 1, as these wages are exempt from the employer's portion of the Social Security tax.
• The refundable credit for qualified sick leave wages should be reported on line 13c.
• Any qualified health plan expenses related to these employees should be reported on line 19.

For the 2023 tax year, qualified sick leave wages paid for leave taken between March 31, 2020, and April 1, 2021, are not subject to the employer's share of Social Security tax, with a rate of 6.2%. The Social Security wage base limit for 2023 is $160,200, while the Medicare tax rate remains at 1.45%, with no wage base limit.