Contact your former employer if you believe that the W-2 form you received was incorrect or to determine how much of the third-party sick pay was covered by your premium payments.
The taxability of third-party sick pay depends on whether you paid for the cost of the policy or your employer paid for the policy. If you and your employer jointly paid the premiums, only the disability amount covered by your employer's payments is taxable.
See this TurboTax help article and this one for more information.
If you and your employer jointly paid the premiums, only the disability amount covered by your employer's payments is taxable.
Box 13 of Form W-2 is where your employer can provide info to the IRS about whether you're a statutory employee, if you're enrolled in a retirement plan, and whether you received third-party sick pay.
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
If you receive a W-2 like the above, don't include it in your return. If you try to e-file and include this W-2, the IRS will reject your return.
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.
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