TurboTax including income from W2 from Short-Term Disability Insurance Company as taxable income when it should not

I was told that our short-term disability payments are not taxable. I received a W2 form from the 3rd party insurance company that my company uses for our short-term disability plan. The federal income tax withheld (box 2) has no value, which seems to confirm this statement. Also, the "Third-party sick pay" box is checked in box 13 of the W2. However, TurboTax is still including this as taxable income.

I saw another post indicating that code "J" should be in box 12 of the W2 with the non-taxable amount, but this was not the case on my W2 form. Is there something I am missing here?

posted

Unless you pay the premium , the claim payments are taxable.... since many times the short term payments are employer benefits, they would be taxable

Many do not withhold taxes so to maximize cash flow while you are out sick