One form that often confuses is IRS form 7202. In this article, I will explain what IRS form 7202 is, what it is used for, how to fill it out correctly, and its features.
What is IRS Form 7202?
IRS form 7202 is a tax form used by employers to claim the refundable tax credits provided under the Families First Coronavirus Response Act (FFCRA). The FFCRA was passed by Congress in March 2020 in response to the COVID-19 pandemic. The FFCRA provides two types of paid leave for eligible employees affected by the pandemic:
1.Emergency Paid Sick Leave (EPSL):
Under this provision, eligible employees can take up to two weeks (80 hours) of paid sick leave at their regular rate of pay, up to $511 per day, if they are unable to work (or telework) because of the following reasons:
- They are subject to a federal, state, or local quarantine or isolation order related to COVID-19.
- They have been advised by a heahealthcareovider to self-quarantine due to concerns related to COVID-19.
- They are experiencing symptoms of COVID-19 and seeking a medical diagnosis.
- They are caring for an individual who is subject to a quarantine or isolation order or who has been advised by a heahealthcareovider to self-quarantine due to concerns related to COVID-19.
- They are caring for a child whose school or place of care has been closed or whose chichildcareovider is unavailable due to COVID-19 precautions.
2.Emergency Family and Medical Leave Expansion Act (EFMLEA):
Under this provision, eligible employees can take up to 12 weeks of paid leave at two-thirds of their regular rate of pay, up to $200 per day, if they are unable to work (or telework) because they need to care for a child whose school or place of care has been closed or whose child care provider is unavailable due to COVID-19 precautions.
Using IRS Form 7202
IRS form 7202 is used by employers to claim the refundable tax credits provided under the FFCRA. These tax credits are designed to offset the cost to employers of providing EPSL and EFMLEA to eligible employees. The tax credits are refundable, which means that if the amount of the credit exceeds the employer’s liability for social security and Medicare taxes, the excess is refundable to the employer.
How to fill out IRS Form 7202 lines correctly?
Filling out IRS form 7202 correctly is important to ensure that employers claim the correct amount of tax credits. Here are the steps to fill out the form correctly:
- Enter the employer’s name, address, and employer identification number (EIN) in the appropriate spaces at the top of the form.
- Enter the total amount of qualified EPSL wages paid by the employer during the calendar quarter in Column 1, Line 1. Qualified EPSL wages are wages paid to eligible employees who took EPSL under the FFCRA.
- Enter the total amount of qualified EFMLEA wages paid by the employer during the calendar quarter in Column 2, Line 2. Qualified EFMLEA wages are wages paid to eligible employees who took EFMLEA under the FFCRA.
- Enter the total amount of qualified health plan expenses allocated to EPSL and EFMLEA wages in Column 3, Line 3. Qualified health plan expenses are amounts paid or incurred by the employer to provide and maintain a group health plan (including insurance premiums)
- Add the amounts entered in Column 1, Line 1, Column 2, Line 2, and Column 3, Line 3 to get the total amount of qualified sick and family leave wages and qualified health plan expenses in Column 4, Line 4.
- Enter the total amount of any advance payments of the tax credits received by the employer in Column 5, Line 5.
- Subtract the amount entered in Column 5, Line 5 from the amount entered in Column 4, Line 4 to get the total tax credit in Column 6, Line 6.
- Enter the total amount of social security and Medicare taxes that the employer is required to deposit for the calendar quarter in Column 7, Line 7.
- If the amount entered in Column 6, Line 6, is more than the amount entered in Column 7, Line 7, enter the excess amount in Column 8, Line 8, as a credit.
- If the amount entered in Column 6, Line 6, is less than the amount entered in Column 7, Line 7, the employer may be eligible to request an advance payment of the tax credits on Form 7200.
Features of IRS Form 7202
Here are some important features of IRS form 7202:
- It is used only by employers to claim the tax credits provided under the FFCRA.
- The form must be filed for each calendar quarter in which the employer is eligible to claim the tax credits.
- The form is due by the same date as Form 941, Employer’s Quarterly Federal Tax Return.
- The tax credits are refundable, which means that if the amount of the credit exceeds the employer’s liability for social security and Medicare taxes, the excess is refundable to the employer.
- The tax credits are available only for wages paid for the period beginning on April 1, 2020, and ending on December 31, 2020.
- The tax credits are subject to certain limitations, including limits on the amount of EPSL and EFMLEA wages that can be taken into account and limits on the total amount of the tax credits that can be claimed.
Conclusion
IRS form 7202 is an important form that employers must use to claim the refundable tax credits provided under the FFCRA. By filling out the form correctly and claiming the correct amount of tax credits, employers can offset the cost of providing paid sick and family leaves to eligible employees affected by the COVID-19 pandemic. If you have any questions about IRS form 7202 or the tax credits provided under the FFCRA, consult with a tax professional or visit the IRS website for more information.
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