The way you enter the short term disability
benefit depends on whether it is taxable as regular income, and how the
insurance premiums are paid.
It is taxable
when your employer paid your premiums partially or fully or if you paid the coverage with pretax
dollars. Your employer will report it as part of your wages in box 1. As you
enter your Form W-2 as the replica in the TurboTax program, the program will
include in your wages on line 7 of your Form 1040 as a taxable
transaction.
It is not taxable
if the payments come from a third party
like an insurer, and you pay for the policy with after-tax dollars --
even if it's purchased through a health plan. Nontaxable disability
payments will be reported in Box 12 of the Form W-2, using Code J.