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W-2 showing Non-Taxable Sick Pay in Box 1


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#1 Eli

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Posted 28 April 2009 - 08:14 AM

Client has a W-2 with an amount in box 1 (all other boxes blank). Box 13 has Non-Taxable Sick Pay checked. I asked him to double check with the issuer and he just got back to me saying that it was correct. I'm not so sure this is correct. If I enter box 1 figures he will be taxed on it.

Do you think this is correct?

Thanks!!
Eli

#2 mcb39

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Posted 28 April 2009 - 08:28 AM

Eli, I had one of these this year. It was reported on a W2.....SS and MC taxes were withheld from part of it. The box in Section 13 that was checked was "Third Party Sick Pay". You are correct that it will come up as taxable income. In my case, after considerable research, it turned out to be correct that it was taxable and I had a very unhappy client who had no Fed or WI taxes withheld on $23000 of taxable sick pay.

The rules seem to be rather complicate on this issue with a lot of ifs, ands and buts; however, in my case it was taxable and the client conceded that since she had been receiving full pay; she should have questioned why no taxes were being withheld.

Disability and/or Workmens comp is usually not taxable, but why are you assuming that sick pay falls into that same niche. My client was not injured on the job. Was yours?

#3 TAXBILLY

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Posted 28 April 2009 - 11:35 AM

There is no such box on the W-2 that is labeled: "non- taxable sick pay".
The box is labelled "third party sick pay".
Sick pay is taxable if the premium is paid by the company rather than the employee.
I believe this is your case and therefore the amount is taxable.
taxbilly

#4 Eli

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Posted 28 April 2009 - 12:08 PM

There is no such box on the W-2 that is labeled: "non- taxable sick pay".
The box is labelled "third party sick pay".
Sick pay is taxable if the premium is paid by the company rather than the employee.
I believe this is your case and therefore the amount is taxable.
taxbilly


TaxBilly & Marilyn, you are both correct. Thank you!

Eli

#5 jainen

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Posted 28 April 2009 - 12:28 PM

>>no such box on the W-2 that is labeled: "non- taxable sick pay"<<

Non-taxable sick pay is reported in Box 12 with code J.

#6 TAXBILLY

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Posted 28 April 2009 - 02:06 PM

And the box is labelled: "see instructions". :~)
taxbilly




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