Does third party sick pay qualify for earned income credit?

[macuser_22]

Is it reported in box 1 on a W-2?

[AnthonyJ · Accepted solution]

Please refer to the answer posted by SweetieJean (SuperUser) regarding this question.

https://ttlc.intuit.com/replies/5485818

[rog3]

Third party sick pay not allowed by California for EIC

[macuser_22]

@rog3 - CA  follows the Federal.   I see nothing in  CA tax code that excludes 3rd party sick pay that is reported in box 1 on a W-2.    Do you have a cite?

[SweetieJean]

Eligible sources of earned income from:
W-2 wages.
Self-employment
Salaries, tips.
Other employee compensation subject to California withholding.
Note: The 2017 tax year is the first time self-employment income can be used to qualify for Cal EITC.
<a rel="nofollow" target="_blank" href="https://www.ftb.ca.gov/individuals/faq/net/900.shtml">https://www.ftb.ca.gov/individuals/faq/net/900...>
Third Party Sick Pay is typically reported on a W-2.  Perhaps OP is thinking of CA Paid Family Leave that is reported on a 1099-G?

[rog3]

I do not have cite. FTB letter states "We disallowed your EIC because you did not have earned income (code: CA)" However CA uses fed AGI which includes W-2 third party pay of 8,200. However taxpayer has no taxable income and that may be the issue. Concerned that Turbotax program may need to be revised for CA

[SweetieJean]

Per CA, gather:
Proof of your earned income (W-2, W-2C, 1099 forms) and final year-to-date pay stub(s).
Contact and submit documents to the Filing Compliance Bureau:
Phone: 916.845.7088
Fax: 916.845.9351
Mail: Franchise Tax Board MS 151
PO Box 1468
Sacramento, CA 95812-1462

[macuser_22]

As far as I know CA only excludes sick pay paid under FICA or the Rail Road Employees act.   3rd party sick pay that the IRS counts as earned income is also counted as earned income in CA.

[SweetieJean]

Did the W-2 have an amount in Box 16 (state wages)?

[rog3]

Yes the W-2 includes third party sick pay in Box 16 state wages. All W-2  wages is third party sick pay