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Third-party sick pay

December 27, 2018

Sick pay is any amount paid to an employee who is unable to work because of sickness or injury. These amounts are sometimes paid by a third-party, such as an insurance company, and may be subject to Social Security, Medicare and income taxes.

These wages can either be included on the W-2 issued by the third-party provider or the payroll provider. Contact your third-party provider to confirm who is issuing the W-2, and be mindful of deadlines with your payroll provider and IRS requirements. Your payroll provider may have an earlier deadline than the IRS requires for third-party providers.

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