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Non-Taxable Sick Pay

Level 1

I have a W-2 received from a client.  It has in Box 13 "Third-party sick pay" checked and a J listed in line 12a.  It also has the same amount listed in Box 1.

Question:  If it's non-taxable why is it in Box 1 since it gets picked up as taxable wages?

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3 Replies 3
Level 15

Two possibilities:

1. The W-2 was prepared incorrectly and there should not be an amount in box 1. Have the client contact the issuer.

2. The W-2 is correct. They received a code "Code J—Nontaxable sick pay. Show any sick pay that was paid by a third party and was not includible in income (and not shown in boxes 1, 3, and 5) because the employee contributed to the sick pay plan. Do not include nontaxable disability payments made directly by a state." and it was supplemented with taxable pay, e.g. We make you whole. The company matches any third part disability because (they are nice) (the client got covid) ....  Have the client contact the issuer.Have the client contact the issuer.


ex-AllStar
Level 1

Thank you for the response.  I'm going to have the client get back to the issuer of the W-2.

0 Cheers
Level 15
Level 15

Usually we see those with Code J have nothing in Box 1 and the W2 is just disregarded...sounds like someone flubbed up the W2.


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