I have 2 W2's one from my employer and one for third party sick pay

[Emily E]

I have 2 W2's one from my employer and one for third party sick pay, do I check Paid Family Leave for both or only the Agent W2? The W2 from the Agent has a box 14A Included in Wages. Do I need to check the Paid Family Leave box?  No federal tax was withheld but Social Security and Medicare Taxes were withheld. What is the proper way to enter this into TurboTax? 

[DawnC]

Enter both W-2s and check the Paid Family Leave box on the one that has the entry on Line 14.    PFL is taxable on your federal return, so you won't see any changes in your federal refund by marking that box.   But some states do provide a tax exclusion for PFL income.   Marking the box ensures TurboTax doesn't tax the income on your state return if your state does not tax the income.   

[Emily E]

Hi, thank you - both have information on line 14, the employer has state withholdings lists and the third party says included in wages.  This had a huge impact to my return; no federal tax was withheld from the short term disability payment and I owe almost half of what I received.  So I'm not sure why I owe federal taxes if this should not be taxable at the federal level only the State, which is NJ. 

[GeorgeM777]

Unless your third-party sick pay was paid with after-tax dollars, your third-party sick pay is taxable. Depending on the coverage plan, premium costs might be covered by the employer, employee, or both parties. Regardless of who is paying the premiums, sick pay is taxable when these premiums are paid with pre-tax dollars.

When the sick pay is paid by the employer or an agent of the employer, there is a mandatory withholding requirement.  However, when the sick pay is paid by a third party that is not an agent of the employer, then there is no mandatory withholding requirement because such payments are not considered wages.  Thus, that could account for your tax liability being what it is given that the third party paying the sick pay may not have been an agent of your employer.  

@Emily E