Did you receive a second W-2 from your employer reporting taxable short term disability? Please clarify.
Taxable short term disability benefits will be reported on a W-2.
The W-2 may be issued by your employer or reported on a Form W-2 issued by the insurer, depending on the arrangement your employer has with the insurance company providing the benefits.
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, than 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.
See this TurboTax Help.
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