Out of work payments

[clion6465]

My husband works for the railroad and pays into a Railroad retirement fund if he has to be out sick they pay him from that money. He got a w-2 from them with what he was paid for the time out when I enter it because no federal taxes were taken out we owe money. Why? He paid this money in, also he paid for a another out of work insurance monthly which paid him while he was out and we got that deducted too because no federal taxes were taken out of that. Why are we paying more if he paid for this stuff.

[ErnieS0]

The RRB will not withhold any federal tax if you did not file a W-4 withholding form. The taxable amount takes into consideration money paid in and is the amount of benefits payable before deduction of Tier I railroad retirement tax.

The RRB says:

Sickness benefits paid under the Railroad Unemployment Insurance Act, with the exception of sickness benefits paid for an on-duty injury, are considered income for Federal income tax purposes.

Each year, the RRB sends railroad employees Form W-2, Wage and Tax Statement, showing the amount of sickness benefits paid during the preceding calendar year.

The amount shown on Form W-2 is the amount of benefits payable before deduction of Tier I railroad retirement tax. The amount includes benefits payable but withheld to offset a debt to the RRB.

For more info see: When Sickness Benefits are Taxable