myPay Solutions
This topic discusses Third Party Sick Pay at year-end.
What is Third Party Sick Pay
Third Party Sick Pay (also referred to as disability) is any amount paid under a plan for an employee’s temporary absence from work due to injury, illness, or disability. Sick Pay includes both short and long-term benefits and is often expressed as a percentage of the employee’s regular wages.
myPay Solutions only processes the taxable portion of Third Party Sick Pay (Short Term Disability)
How is Third Party Sick Pay taxed and Reported on the W-2
- FICA (SS/MED) – Taxable
- Federal Withholding – Taxable
- State Withholding – Taxable (PA/NJ Exempt)
- Local Withholding – Taxable (PA/NJ Exempt)
- Federal Unemployment – Taxable
- State Unemployment – Taxable
- W-2 Box 12: Third Party Sick Pay
You may need to notify your insurance company that myPay Solutions will include Third Party Sick Pay on the Forms W-2 that we prepare for you, as well as fourth quarter returns.
Who needs to report Third Party Sick Pay and what amounts should be recorded
Any employee that received disability pay during the calendar year. The amount to report will be specific to each employee. Your policy provider should be able to provide a statement of the benefit amounts paid.
How do I add Third Party Sick Pay to an employee’s W-2
Please upload the disability benefits statement from your policy provider to the File Exchange section of your portal. Your myPay Solutions payroll specialist will reach out to you to confirm the information and processing details.
Click here for the Help & How to article for using File Exchange.
What is the latest date to submit Third Party Sick Pay before the end of the year
It is ideal to report Third Party Sick Pay information to myPay Solutions on or before the standard reporting deadline of 12/27/22. By law, Third Party Sick Pay insurers have until January 15, 2023 to notify employers of any disability benefits paid to employees during 2022. You can likely obtain the benefit information sooner by specifically requesting it from your provider. If you are notified about disability payments after reporting your last payroll of the year, please contact your payroll specialist immediately. If provided after December 27, 2022, a W-2c may be issued. If provided after January 15, 2023, a W-2c may be issued and late submission fees will apply.
Was this article helpful?
Thank you for the feedback!
TPSP reports are often sent mid-January of the new year. A late fee is applicable for late submissions after January 15th. W-2C's and Tax returns will need to be amended.