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LOH2013
New Member

I received a W-2 for disability pay with an amount in box 1 but I paid the premium with post tax dollars. Is this W-2 incorrect?

 
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1 Reply
AnthonyJ
New Member

I received a W-2 for disability pay with an amount in box 1 but I paid the premium with post tax dollars. Is this W-2 incorrect?

Yes.  Per IRS Publication 15-A"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." 

The disability paid by an insurance company for lost wages, loss of limbs, loss of sight (etc.) may or may not be subject to taxes, depending on the circumstances:

  • If the premiums were paid by your employer and were not included in your taxable income, the disability is subject to tax.
  • If you paid premiums out of pocket or with payroll deductions that came out of your after-tax income, the disability is not subject to tax.
  • If you and your employer jointly paid premiums, only the amount of the disability covered by your employer's payments is taxable.
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