Form W-3 Box 13 & 14 Third Party Sick Pay

I had 2 employees who received non-taxable disability pay in 2019.  (Because they paid the premiums with after tax dollars, the income received is non-taxable.)

I was sent a third party report from the disability company, saying these amounts need to be reported on the employees' W-2 with a J code.  In preparing the W-2s, however, Quickbooks does not ask whether the amounts are taxable, and adds the disability amount to the total wages.  Since we did not pay the disability amount, we did not take out FICA taxes on the disability.  QB will not let me proceed with the W-2s, saying there is an error, that the social security tax withheld is too low with regard to the total wages (which included the non-taxable disability.) 

How do I proceed?

Thank you!

Thanks for posting in the Community, @PT2020.
 

To report these amounts in W-2, you can set up non-taxable third-party sick pay on a payroll check to include it in Box 13. Box 13 is checked only if you are "Third Party Payer", or you are reporting amounts paid by a third party for sick pay.

You can refer to this article in setting up accurately to properly report these payments on W-2: Report third-party sick pay to QuickBooks Online Payroll and QuickBooks Desktop Payroll Assisted.

Here's a your guide on how to populate the boxes in W-2: How to Understand and Fill Out a W2.

I'm always free for your Reply if you need more help. I'll be happy to guide you. Have a good one!

@Jovychris_A 

This information above concerning non taxable third party sick pay entry is super helpful.  Can I ask in addition, in which box will this value populate onto the W3?

Thanks so much!

@Jovychris_A 

This information concerning the adding of third party, non-taxable income, Box 12b is super helpful.  Might I inquire about where this value would populate on the corresponding W3?

Thanks so much!

Hello there, MDTrog. 

The codes and amount reflected in Box12 of your Form W-2 will show in Box 12a of your W-3. There are codes that will reflect on these boxes that are only reported in the Form W-2 and not on the Form W-3. 

You can look into the instructions of each form for your guide in filling out the forms. I also suggest reaching out to your accountant to help you in filling out the forms. 

Feel free to get back to us if you need anything else.