Third Party Sick pay in New Jersey

[rkp29]

I received disability pay for all of 2024.  My W-2 shows "3rd Party Sick Pay" checked in Box 13.  Box 16 shows the full amount of wages as is shown in Box 1.  I have read that 3rd party sick pay is non-taxable income in the state of NJ.  So, when I filed my return I filed it as non-taxable wages.  My return was adjusted by the state and I obviously received a much smaller refund.  There was no explanation included.  Is this because the 3rd party sick pay (disability pay) policy premiums were provided for by my employer?

[LenaH · Accepted solution]

Yes. Your third-party sick pay is taxable if your employer paid for your policy. This is why the full amount of wages were in Box 16 of your W-2. This should not have been reported as non-taxable wages originally.