TurboTax FAQ
TurboTax FAQ
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Is third-party sick pay taxable?

It depends on whether you paid for the cost of the policy, or your employer paid for the policy.

If you paid for the policy: Your third-party sick pay is not taxable.

  • You might still receive a W-2, but you do not need to report the W-2 as long as all of the following apply:
    • Box 1 – Wages – is $0 or blank 
    • Box 12 has Code J
    • Box 13 – Nontaxable sick pay: This box is checked.

If you receive a W-2 like the above, do not include it in your return. If you try to e-file and include this W-2, the IRS will reject your return.

  • If your employer paid for the policy: Your third-party sick pay is taxable.
    • You will receive a W-2 with taxable wages in Box 1, and you will include this W-2 in your return.

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