LTD, Roth IRA contributions, and taxes

[Pippi1960]

Hello,

Let me start by saying I filed an extension along with estimated taxes owed; however, I have not finalized my taxes for 2021.

This message contains multiple questions. I hope I am able to articulate them well enough!

1. I am getting confused about whether or not my third-party sick pay is considered earned or unearned income. I am under retirement age. The insurance was paid for by my employer. I received a W-2 from the insurance company identifying the sick pay as income and taxes were withheld. I cannot find a clear-cut answer to the "earned" or "unearned" question neither within the IRS regs (Topics on LTD income seemed tied to SSDI--which I do NOT receive.) nor through my tax guy, my employer, or the insurance company. The answer determines if I erroneously contributed to my Roth IRA.  If I should NOT have made a contribution (I did!), how do I fix that in TurboTax?
   
   
2. I received a W-2 from my employer listing as income the taxable cost of group term life insurance >$50,000.  Box 12 identifies the same amount coded as C. Box 12 also contains amounts identified as uncollected social security tax (12 M)  and another for uncollected medicare tax (12 N).
   Do I owe social security and medicare taxes on the "uncollected" taxes from my employer's W-2? If so, how do I pay them?
   
   
3. I noticed the insurance company did NOT identify (collected OR uncollected) social security or medicare taxes on my W-2 for 2021. Do I owe social security and medicare taxes on the income shown on the insurance company's W-2?  If so, how is this addressed in TurboTax?

Kind regards and many, many thanks for the help!

[Opus 17]

1. Your disability pay is probably not earned income, since you aren't paying FICA on it, but it is considered "compensation" for purposes of making IRA contributions.  Compensation (for IRA) is not always the same as earned income.   For the IRA, compensation is your box 1 wages (except you have to subtract any box 11 payments from non-qualified plans.)

https://www.irs.gov/publications/p590a#en_US_2021_publink1000230355

3. Generally speaking, disability pay is "earned income" and subject to FICA for the first 6 months after you become disabled, and is unearned income after that.  There are some exceptions and wrinkles. 

https://www.irs.gov/pub/irs-drop/n-15-06.pdf

If you are within the first 6 months, your employer or the insurer should have taken care of this automatically, you should call them and ask for a corrected W-2. There is a way to pay this yourself but it would be better for the insurer to fix it. 

2. A life insurance policy in excess of $50,000 is considered part of your taxable wages.  Since you aren't actually working, your employer can't collect the FICA and medicare taxes owed.  Turbotax should recognize that you owe these taxes and put them on schedule 2 line 13 automatically.  Just enter the W-2 as written. 

[Pippi1960]

Thank you very much!!