Should Turbo Tax be including my husband's sick pay from his pension program as income and not non-taxable income? How would I fix this?

[mamazeus]

Should Turbo Tax be including my husband's sick pay from his pension program as income and not non-taxable income? How would I fix this?

[cblaisludlowcomm]

I think that if you are paying the premium for the sick pay insurance, it is not taxable.  Chech with your employer or pension program to verify,  if taxable, you will have to file an amendment to include the sick pay as income. 

[BillM223]

"sick pay" - is this sick pay or disability income?

Disability income from a pension is normally taxable at the federal level, although the rules vary at the state level from state to state.

[Opus 17]

More information is needed.

If a disability insurance policy is paid for from pre-tax money or by the employer, the proceeds are taxable income.  If a disability policy is paid by the employee with after-tax money, the proceeds are not taxable. 

If a person retires on disability and receives a pension, the pension is taxable as wages until the employee reaches minimum retirement age--this means paying income tax AND social security and medicare tax.  Once the person reaches minimum retirement age, the pension becomes taxable as a pension and is subject to income tax but not social security and Medicare tax.

Pensions are never tax-free, except that some state employee pensions may be tax-free in that state.  

What exactly happened and what forms did you get?

[mamazeus]

This is long term disability income.  W-2 is marked w/ J.  I put that in Turbo Tax but it is counting it as taxable income.

[Opus 17 · Accepted solution]

If you have a W-2 with code J, you don’t have to file it.  You can delete it from your return.  

[mamazeus]

Thank you so much.  That is what I thought but wasn't sure. I really appreciate the help.  This is the first time I used this feature and it is extremely helpful.