Tracking COVID19 Paid Leave in QuickBooks Desktop

Please note that if you’re using QuickBooks Desktop Payroll Assisted, you’ll need to contact customer service to get permission to use the Default button.

• At the top of the menu, choose Employee.
• Select one of the National Paid Leave items you created by scrolling down to Manage payroll items, Edit/view payroll items, and then select one of the National Paid Leave items you made.
• Select Next until you reach the taxability page, where you can choose the default option. This will unmark Employer Social Security from your taxability.
• Repeat this process for all National Paid Leave additions you’ve developed.

There are a few things you must do before you can pay your workers. Here’s what you can do.

Step1: Determine your employee’s benefit and hourly rate: Before you can grant your workers sick leave, you must first determine what form of pay leave they are eligible for and their hourly rate.

Type of benefit

There are three forms of paid leave available under the FFCRA. Employers will also get a refund for any health care premiums paid for affected workers while they are on leave.

• An employee on National Paid Leave: The employee has COVID-19 and is in quarantine.
• National Paid Leave Family: The employee is caring for a sick or COVID-19-affected family member.
• National Paid Leave FMLA: Your employee is taking leave under the Family Medical Leave Act (FMLA) to care for children under 18 whose school or child care is closed due to COVID-19.
• National Paid Leave – Health Credits: You can track how much you contribute to an employee’s health benefits during the period they are paid under the FFCRA provisions. A refund would be added to your federal tax liability.

Hourly rate

Most of the time, you’ll pay your employee the hourly rate you’ve been paying them for the previous six months. However, a few variations conform to the Fair Labor Standards Act’s Regular Rate of Pay (FLSA).

Employees on commission: Employees who are paid on commission must be paid an hourly rate. Under the FFCRA, their hourly rate must be equal to the commission charged in the previous six months divided by the number of hours employed during that period.

Tipped Employees: When entering the employees’ paid leave or FMLA expansion pay, ensure their tipped salary. Examine the amount of money they’ve made in the last six months. Then multiply that by the number of hours they worked during the same period. At this time, you’ll need to adjust the employee’s pay scale to make sure you’re paying them at least the minimum wage set by the FLSA, your state, or your local jurisdiction.

Step 2: Set up your paid leave expense accounts: Once you’ve determined the form of paid leave is appropriate for your employee’s situation, creating this account would allow you to keep track of the qualifying salaries for future tax credits.

• Select Chart of Accounts from the Lists menu.
• Select New from the Account dropdown menu.
• Select Expense and then Continue.
• Select Other Expense from the Account Type dropdown.
• In the Name area, give your expense account a name, such as COVID-19 Expenses, fill out all of the required details, and then click Save and Close.

Step 3: Set up payroll products: After you’ve set up your liability and expense accounts, you’ll need to create payroll items to monitor each form of paid leave you described in phase 1 under the FFCRA.

Employees on National Paid Leave and their Families on National Paid Leave

• Pick New Payroll Item from the Employees menu, then Manage Payroll Items.
• Select Custom Setup before moving on to the next step.
• Pick Next, then Addition (Employee Loan, Mileage Reimbursement).
• Select Next after giving your pay form a name, such as National Paid Leave EE or National Paid Leave Family.
• Select COVID-19 Expenses (or whatever you called the expense account) and then Next in the Expense account slot.
• Pick a paid leave form, such as National Paid Leave EE or National Paid Leave Family, in the Tax tracking type window, based on the tax tracking type you’re creating.
• Select Next in the Taxes window.
• Select Calculate this item based on Quantity in the Calculate Based on Quantity window, then Next.
• Set the rates for the following things in the Default Rate and Limit window. The employee cap for National Paid Leave is $5110, and the family limit is $2000.
• Make sure the Limit Type is Annual, then pick Finish after each year.

National Paid Leave FMLA

• Pick New Payroll Item from the Employees menu, then Manage Payroll Items.
• Select Custom Setup before moving on to the next step.
• Click Next after selecting Addition.
• In the text area, give your payment form a name, such as National Paid Leave FMLA, and then click Next.
• Next, choose COVID-19 Expenses (or whatever name you gave the expense account) as the expense account.
• Select National Paid Leave FMLA in the Tax Tracking form window, then Next.
• Select Next in the Taxes window.
• Select Neither in the Calculate Based on Quantity window, and then Next.
• Make sure the rate is 0, and the cap is $10,000 in the Default Rate and Limit window, then pick One Time Limit from the Limit Type dropdown and Finish.

National Paid Leave – Health Insurance Premium

• Pick New Payroll Item from the Employees menu, then Manage Payroll Items.
• Select Custom Setup before moving on to the next step.
• Then pick Next after selecting Company Contribution.
• Select Next after giving your company contribution a name, such as National Paid Leave – Health Credits.
• Select COVID-19 Expenses from the Liability account dropdown and COVID-19 Expenses (or whatever you called the expense account) from the Expense account dropdown on the Agency for company-paid liability screen, and then select Next.
• Select Yes when prompted to confirm that you selected the same account in the pop-up message. By using the same account for Liability and Expense, you can avoid overstating your liabilities.
• Select National Paid Leave-Health from the Tax Monitoring Form window, then Next.
• Select Next in the Taxes window.
• Select Neither in the Calculate Based on Quantity window, and then Next.
• Make sure the rate is 0.00, and the limit is 10,000 in the Default rate and limit window, then pick One-time Limit from the Limit Type dropdown and Finish.

National Paid Leave & Medicare Credit

• Pick New Payroll Item from the Employees menu, then Manage Payroll Items.
• Select Custom Setup before moving on to the next step.
• Then pick Next after selecting Company Contribution.
• Select Next after giving your company contribution a name, such as National Paid Leave – Medicare.
• Select COVID-19 Expenses from the Liability account dropdown and COVID-19 Expenses (or whatever you called the expense account) from the Expense account dropdown on the Agency for company-paid liability screen, and then select Next.
• Click Yes on the pop-up message asking if you selected the same account.
• Pick National Paid Leave-Medicare from the Tax Monitoring Form pane, then Next.
• Select Next in the Taxes window.
• Select Neither in the Calculate Based on Quantity window, and then Next.
• Make sure the rate is set to 0.00, and the cap is set to 0, then select Annual, restart each year from the Limit Type dropdown, and select Finish on the Default rate and limit window.

Step 4: Double-check that you have a new National Paid Leave Credit tax object or create one.

A new tax item called National Paid Leave Credit should have been automatically added to the payroll item list. If you don’t see this tax item, set it up using the steps below. You’ll need this to keep track of your tax credits.

• Pick New Payroll Item from the Employees menu, then Manage Payroll Items.
• Select Custom Setup before moving on to the next step.
• Pick Other Tax from the Payroll item form pane, then Next.
• Pick National Paid Leave Credit from the Other Tax window, then Next.
• Enter National Paid Leave Credit in the text area of the Name used in paychecks and payroll report window, then pick Next.
• Select COVID-19 Expenses in the Liability account dropdown, COVID-19 Expenses in the Expense account dropdown, and COVID-19 Expenses (or whatever you called the expense account) in the Expense account dropdown, and then select Next in the Agency for company-paid liability window.
• Select Finish from the Taxable Compensation window.