How do I put my information in for short term disability?

Forum|Forum|6 years ago
March 6, 2020
2 replies
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TurboTax Deluxe Online

HelenC12

Level 15

Short-term disability benefits are taxable when the premiums are paid by your employer.

They are not taxable when you pay the premiums.

If the short term disability is on your W-2 or a separate W-2, enter the W-2 and answer any subsequent questions related to your disability payment.

Generally, the W-2 Box 13, Third Party Sick Pay is checked.

See the following article for additional information: Are Short Term Disability Claim Payments Considered Earnings?

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whitro1164

Level 2

Received Third-Party W2 for Short-Term Disability Benefits

I am using 2020 Turbo Tax Deluxe to do my taxes. I had COVID and was hospitalized for 22 days. I applied for and received Short Term Disability (STD) for a month and a half from a third-party insurer. I received a W2 and when I input the third-party W2 info in the Turbo Tax Deluxe software it lower my refund about drastically to the point that I owe federal and state. I get my STD benefits from my employer as an after-tax. Did I put W2 info in the correct place? There is no where else in the software that ask if I received or was on Short Term Disability during the year 2020. Please assist.

gloriah5200

Level 10

If your employer pays the premiums for your short-tern disability at no cost to you, then it will be taxable to you when received.

If you paid the premiums for your short-term disability out of untaxed money, then the income payments will be taxable to you when received.

If you paid the premiums for your short-term disability out of taxed (after-tax money), then your short term disability payments received should be tax free.

If it does not look correct to you, you should discuss it with your employer to verify.

017508356

Level 2

Hi,

I did not receive any paperwork (W2) for when I was on Short Term Disability. How do I procure this information ? Thank you,

Fred Frigault

JamesG1

Level 15

Was the short term disability income reported on your W-2 from your employer? If not, you may receive a second W-2 from an insurer reporting taxable short term disability. Contact your regular employer to find out whether you should have received this paperwork.

Taxable short term disability benefits will be reported on a W-2 and, in TurboTax Online, reported under Federal / Wages & Income / Your income / Job (W-2).

Short term disability (STD) payments can take one of two forms. They can be a taxable wage replacement benefit, or a non-taxable insurance benefit. Whether a STD benefit is taxable or not depends on who is paying the premium to the insurance company.

If your employer pays the premium for the disability insurance product, then any payment you receive is taxable to you as a taxable wage replacement payment. The insurance contract is considered to be a "wage replacement" and not a pure insurance payment.

If you, the employee, purchase the insurance product with after tax money, than the payment of the benefit is not taxable income to you. The payments you receive are not considered to be a wage replacement payment.

@017508356

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ARC371

Level 3

Hi @JamesG1!

Similar question for me...

I received a W2 from my employer AND the insurance company I received short-term disability benefits through.

The employer W2 has my STD gross payments in boxes 1, 16 and 18 (I live in Michigan and work in Pontiac so this is my Federal, State and Local wage boxes, respectively). They also show the Social security tax and Medicare tax withheld in boxes 4 and 6. However, they do NOT show the Federal tax that the insurance company withheld in box 2 (I filled out a W4-S to have federal taxes withheld from my STD checks). I don't understand why the Federal tax is not showing up but everything else is. The "Third-party sick pay" box is also checked in box 13.

I ALSO received a W2 from the insurance company showing the correct Wages, Federal income tax, Social security tax and Medicare tax withheld (so boxes 1, 2, 3, 4, 5, 6, 16 and 17 have figures in them). The "Third-party sick pay" box is also checked in box 13. This W2 is accurate to me.

When I contacted the insurance company, they said they have a tax agreement with my employer so my employer should not be reporting any of my disability information on the W2 they issue to me because that is all reported on a W2 from them (the insurance company).

Is this correct, and my employer needs to update the W2 I received from them to remove the disability payments and Social security and Medicare taxes; and uncheck the Third-party sick pay box?

My employer pays 100% of the disability insurance benefit. I was on short-term disability for 2 months in 2022.

Thank you!

Aimee