I had sick pay due to parental leave. The W-2 doesn't allocate the wages to NJ. Sick pay isn't taxable by NJ however it's being included in NJ income. How do I fix that?

[Cynthiad66]

Check out Box 14 of your W-2.  Sick pay is usually there and is adjusted on the state return from that information.  You should not have to Fix that, it should translate from the W-2 that was entered in the federal.

Box 14 — Employers can use this W-2 box to report information such as:

• State disability insurance taxes withheld
• Union dues
• Uniform payments
• Health insurance premiums deducted
• Nontaxable income
• Educational assistance payments
• A member of the clergy’s parsonage allowance and utilities
• Charitable contributions made through payroll deduction

[jaredih1]

For some context, I live in NJ and work in NY (ie, NY wages). Due to parental for me and my wife, we received 3 W2s and 1 1099 Misc related to disability and PFL. In the state wages portion, they all reference NY (and not NJ) which is what I would expect. For some reason, these amounts are being included in my NJ Gross Income and I don’t know. As I was doing the NJ return after doing the federal and NY, there was a specific screen that even mentioned the sick pay and making sure they weren’t going to get improperly taxed. So again I don’t know why these would be included in NJ Gross Income.

To answer your reply specifically, I looked at all the W2s and 1099, Box 14 was blank on all except for the 1099 which just said “GROSS AMT” followed by the $ amount.

Any additional thoughts on why these are being included in NJ income and how to fix?

Thanks for any help!

[gloriah5200]

If you were NJ full residents, then all income from all sources should be includible as NJ income and if not taxable in NJ, should be subtracted out on the NJ return as taxable income.

[ddibar339]

I have the same issue for the 2021 tax year.  My wife and I received separate W2s for our parental leave marked as 3rd party sick pay, but despite being prompted by turbotax that this isn't taxable by NJ, I am unable to exclude it from our NJ wages.  Were you able to resolve this last year?  The support person suggested I look at form NJ-2440 but this seems quite complicated.  Thanks.

[fanfare]

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[mlnate1]

I have the same issue.  I'm a NJ Resident that works in NY.  Had a third party W-2 for paternity leave benefits that the W-2 listed as NY Income.  Turbo Tax includes this income on my NJ Resident Return.  How do I subtract these third-party parental leave amounts from my NJ return?

[ddibar339]

When doing your NJ portion you should get prompted to enter your state wages applicable to NJ, as it will default to your total state wages from your w2s (NJ + NY).  Just make sure here you enter only the NJ wages which wouldn’t include the 3rd party sick pay if that’s reported under NY

[AmyC]

You need to subtract it as a wage adjustment. The description of NY PFML should eliminate questions from NJ.

@ddibar339    @minate1