Vanessa A
Expert Alumni

State tax filing

Correct.  The DP portion should be reflected on your W-2 as box 1 taxable income when you can NOT claim the DP as a dependent.  However, if you are claiming the person as a dependent on your return, then you can notify them that this person qualifies as a dependent and do not need to include it as box 1 wages.  The benefits are taxable when your DP does NOT qualify as a dependent. 

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