Turbo Tax Issues a Full Tax Credit for Third Party Sick Leave Pay on a W-2

[kfsimala1]

My son has 2 W-2s this year.  The first one is from his employer, and all the information on it processed correctly in Turbo Tax Premier 2005 Desktop.  When I added his second W-2 that was for Third Party Sick Pay, it issued a federal tax credit for the entire amount.  I found an article that his was added in 2021 for people that were self employed or companies with  500 or less employees.  The W-2 was issued by his Union.  He pays union dues out of each pay check.  They provide numerous benefits - medical, dental, vision, sick leave, etc.  They have a Federal EIN.  Boxes 1,3 and 5 include the wages paid.  Box 4 has SS taxes paid. Box 6 has Medicare taxes paid.  Box 13 has Third Party Sick Pay checked.  Box 15 has the state and their state ID, and box 16 has the wages listed.  NO federal, state, or local taxes were taken out or reported.  I found another article that in some instances, not to include the W-2.  Does anyone know what the CORRECT answer is???  Thanks in advance.

[LeticiaF1]

It depends on who paid for the cost of the policy.  If your son paid for the policy then the W2 would not have any amounts on Box 1, Box 12 would have a Code J, and Box 13 would be marked.  If this is the case it would not be taxable.  

It sounds that by what you described that the W2 he received does have taxable wages reported on Box 1, since this is the case he will have to report this income and taxable income on his return.  This means that his employer or the union paid for the sick pay.  

Is third-party sick pay taxable?