Short Term Disability and Paid Family Leave

[lmax85]

Is STD considered Paid Family Leave for tax purposes? I have read two different answers (one stating that it is and the other stating that it isn't) both from this site. Thanks in advance for any responses.

Response stating that it isn't: https://ttlc.intuit.com/community/taxes/discussion/re-short-term-disability-tax-question/01/1870221#...

Response stating that it is: https://ttlc.intuit.com/community/disability/help/is-medical-leave-or-short-term-long-term-disabilit...

[Cynthiad66]

 Yes. Pay from your employer, a third-party insurer, or the government while you're unable to work due to a serious illness or injury is considered paid family leave (PFL) income.

Paid family leave is also known as “family caregiver leave” or “family leave insurance.” Paid medical leave is also known as “temporary disability insurance” (TDI) or “short-term disability.” Paid family and medical leave together are also referred to as “family and medical leave insurance” (FMLI).

Example: You're getting regular paychecks while you're home recovering from major surgery, serious injury, chemotherapy, or pregnancy complications. You're receiving PFL pay.

Typically, companies that offer paid medical leave or disability do so through a third-party insurer. You may receive a separate W-2 from that insurer to report the PFL income or you may see the PFL reported as third-party sick pay on your regular, company-issued W-2.

[lmax85]

@Cynthiad66 Thank you for responding. I didn't receive an additional W2 outside of the one that my employer sent me, and box 13 for 3rd party sick pay on my W2 is not marked. Do I need to do anything different? Just to confirm, when filling out my taxes on TurboTax and it asks if I received Paid Family Leave I should click yes?

Thanks again for your insight and knowledge. I truly appreciate it.

[Cynthiad66]

On the W-2 it should be Box 12 with Code J not Box 13.

A Form W-2 must be prepared even if all of the sick pay is nontaxable (see Box 12 below). All Forms W-2 must be given to the employees by January 31." 

Whether the payments are taxable depends on how and when they are paid. If all or a portion is taxable, the taxable portion will be reported on your W-2 that is issued by your employer, or reported on a Form W-2 issued by the insurer. 

If you receive a W-2 for a third party sick pay, with no amount in box 1 for wages and the income is reported in box 12 with code of J: Non-taxable sick pay is not subject to taxation. It does not need to be reported on your income taxes. Your employer was required to generate a W2 with the figure, which is why you received it. So basically you do not need to file this return, per IRS.

[lmax85]

@Cynthiad66 You are the best. Thank you so much for your responses. After looking at my W2 I have information entered in both Box 1 and in 12 J. So I guess I won't be receiving an additional W2. Thank you for that.

I guess where I am getting stuck now is Turbotax asks if I was paid PFL and I clicked yes. But I contacted my job to confirm that and was told from the payroll department that I was paid STD but that is not the same as PFL so now I don't know if I need to go back and change my answer before submitting my return. 

Thanks again, you've been so, so helpful.

[DaveF1006]

Yes, I would suggest going back and changing that answer just to ensure your return is accurate.

[lmax85]

@DaveF1006 Thank you!