W-2 Box 12 Code J

[user17689614380]

Hi folks, looking for some wisdom on this W-2 I got from disability:

Box 12 contains code J, and Box 13 has "Third-party Sick Pay" checked. However, there is indeed a positive amount in Box 1 that also shows up in Box 12 next to the code J. After this W-2 was added to TurboTax, I am seeing that this Box 1/12 amount was included in the "Taxable Income" total, and the estimated federal tax due increased. But I thought this amount would be non-taxable, and would not affect the total tax liability? Thanks all.

[CAWells]

Was your third-party sick pay policy paid for by yourself or by your employer? 

If you paid for the policy, it isn’t taxable, even if you received a W-2. The income won’t need to be reported as long as you met the following requirements:

• Box 1 is $0 or blank
• Box 12 has code J
• Box 13 has the ‘Third-party sick pay’ box checked. 

If your employer paid for the policy, then your sick pay is taxable. You will need to include the information from the W-2 on your return. 

[AmyC · Accepted solution]

Box 1 is for taxable wages while box 12 code J reports the nontaxable amount. If your employer paid half of the premiums and you paid half, then your w2 is correct and the box 1 amount is taxable.

Contact the employer and determine if you paid the full amount or half of the premiums. 

• If you paid the full amount, the issuer needs to correct the form. Issue you a w2C.
• If you paid half the amount, the form is correct and you have partially taxable income.

If you receive a w2, it must be entered for IRS computer matching so the form needs to be correct.

[user17689614380]

Thank you so much. This is very helpful. My employer and myself indeed shared/co-paid the premium, and now I understand what each number means. But the issue is, the total benefits issued last year does not equal the sum of the Box 1 and Box 12 amounts.. So it's now a question for the insurance company to verify that these numbers are accurate.