Thanks for chiming in, dmertz. Your note about what the "response is actually meant to say" doesn't fit my situation either, but I still think I should answer "No."
As noted in my original query last Thurs, the vacation was valued in 2023, and FICA taxes were withheld in 2023. The remaining balance was paid after voluntary separation in 2025, and federal taxes were withheld in 2025. The 2025 payout amount was included in W-2 boxes 1 and 11. It is not "additional income" or an annuity or pension payment.
Additional info in case it helps:
- My employer had a traditional vacation/sick policy until the company was bought in 2023 by a company with a PTO policy. Since my state allows employers to defer accrued vacation pay until termination, that's what they did.
- The 2025 paystub description for the payout is "Leave Pay."
