I received short term disability from my work. Should I add the amount I got for short term disability to my regular pay as Turbo Tax flagged it as a duplicate entry?

[rewolf59]

Short Term Disability was for 3 months

[JamesG1]

Did you receive a second W-2 from your employer reporting taxable short term disability?  Please clarify.

Taxable short term disability benefits will be reported on a W-2.

The W-2 may be issued by your employer or reported on a Form W-2 issued by the insurer, depending on the arrangement your employer has with the insurance company providing the benefits. 

Short term disability (STD) payments can take one of two forms. They can be a taxable wage replacement benefit, or a non-taxable insurance benefit.  Whether a STD benefit is taxable or not depends on who is paying the premium to the insurance company.

If your employer pays the premium for the disability insurance product, than any payment you receive is taxable to you as a taxable wage replacement payment. The insurance contract is considered to be a "wage replacement" and not a pure insurance payment.

If you, the employee, purchase the insurance product with after tax money, than the payment of the benefit is not taxable income to you. The payments you receive are not considered to be a wage replacement payment.

See this TurboTax Help.

[rewolf59]

I did receive a w-2 from my primary employer as well as a w-2 from the 3-party company representing my employer for my short term disability. Turbo tax says that the different ids are for the same employer and won’t allow me to continue filing my taxes. Do I combine both amounts earned and put them under my primary employer id?

[JohnB5677 · Accepted solution]

If the only information on the third-party W-2 is in box 12, you can include it with the original W-2.  However, if the third party W-2 has income in box 1, you will have to contact your HR or Payroll department to confirm your gross wages.

[ARC371]

Hi @JohnB5677!

Similar question for me...

I received a W2 from my employer AND the insurance company I received short-term disability benefits through. 

The employer W2 has my STD gross payments in boxes 1, 16 and 18 (I live in Michigan and work in Pontiac so this is my Federal, State and Local wage boxes, respectively).  They also show the Social security tax and Medicare tax withheld in boxes 4 and 6.  However, they do NOT show the Federal tax that the insurance company withheld in box 2 (I filled out a W4-S to have federal taxes withheld from my STD checks).  I don't understand why the Federal tax is not showing up but everything else is.  The "Third-party sick pay" box is also checked in box 13.

I ALSO received a W2 from the insurance company showing the correct Wages, Federal income tax, Social security tax and Medicare tax withheld (so boxes 1, 2, 3, 4, 5, 6, 16 and 17 have figures in them).  The "Third-party sick pay" box is also checked in box 13.  This W2 is accurate to me.

When I contacted the insurance company, they said they have a tax agreement with my employer so my employer should not be reporting any of my disability information on the W2 they issue to me because that is all reported on a W2 from them (the insurance company).

Is this correct, and my employer needs to update the W2 I received from them to remove the disability payments and Social security and Medicare taxes; and uncheck the Third-party sick pay box?

My employer pays 100% of the disability insurance benefit.  I was on short-term disability for 2 months in 2022.

Thank you!

Aimee