Box 13 Third Party Sick Pay

Forum|Forum|3 years ago
February 5, 2023
1 reply
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Box 13 Third Party Sick Pay on my W2 is not checked off. However, I received 6 months of temporary disability payments completely payed by a third party. I didn't have to contribute anything towards this.

This should have been checked off by my employer as far as my understanding goes.

Maybe someone in book keeping got careless...

Should I just check this off on my Turbo Tax tax return and fill in how much disability I received?

Would the IRS reject my return because of this discrepancy between my W2 Box 13 not being checked off and my checking Box 13 off on my Turbo Tax return?

Would they request an amended W2 from my employer?

Or is there something I'm overlooking as to why it wasn't checked off? I really don't think so, but just wondering...

Please reply asap as I need to get my taxes completed ASAP.

Thank you...

Best answer by PattiF

It depends on whether you paid for the cost of the policy or your employer paid for the policy. You said that you did not contribute anything to this. The guidelines are that if your employer paid for the policy, then the third-party sick pay is taxable income.

If your employer paid for the policy: Your third-party sick pay is taxable. You'll receive a W-2 with taxable wages in box 1 and include this W-2 in your return.

If you paid for the policy: Your third-party sick pay isn't taxable.

You might still receive a W-2, but you don't need to report the W-2 as long as all of the following apply:
- Box 1 – Wages is $0 or blank
- Box 12 has Code J
- Box 13 – Nontaxable sick pay is checked

From a TurboTax Help article about disability payments:

Disability paid by an insurance company for things like lost wages, loss of limb, or loss of sight may or may not be taxable, depending on circumstance:

If the premiums were paid by your employer and weren't included in your taxable income, the disability is taxable
If you paid the premiums out of your own pocket or with payroll deductions that came out of your after-tax income, the disability isn't taxable
If you and your employer jointly paid the premiums, only the disability amount covered by your employer's payments are taxable

PattiFAnswer

If your employer paid for the policy: Your third-party sick pay is taxable. You'll receive a W-2 with taxable wages in box 1 and include this W-2 in your return.

If you paid for the policy: Your third-party sick pay isn't taxable.

You might still receive a W-2, but you don't need to report the W-2 as long as all of the following apply:
- Box 1 – Wages is $0 or blank
- Box 12 has Code J
- Box 13 – Nontaxable sick pay is checked

From a TurboTax Help article about disability payments:

Disability paid by an insurance company for things like lost wages, loss of limb, or loss of sight may or may not be taxable, depending on circumstance:

If the premiums were paid by your employer and weren't included in your taxable income, the disability is taxable
If you paid the premiums out of your own pocket or with payroll deductions that came out of your after-tax income, the disability isn't taxable
If you and your employer jointly paid the premiums, only the disability amount covered by your employer's payments are taxable

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Charpatt Author

OK. Thank you.

Yes, my temporary disability was completely paid for by a third party. I just thought maybe, somehow, there was something being overlooked because my W2 Box 13 Third-Party Sick pay was not checked. OK, bookkeeping made a mistake and forgot to have that box checked.

I added another question about IRS rejecting my return. Can you go back to my original post and look at this question? Sorry for the hassle...

PattiF

The IRS might not reject your return immediately if you file as though the box for third-party sick pay was checked. Forms are checked for matching and it may take a few months for the difference to be found by the IRS. They will send a letter about the difference in the forms.

If Box13 was not checked in error, ask your employer for a corrected W-2. You could wait to file the return with the corrected form.

@FregOut

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