My wife got state short term disability payments(NY) due to child birth.

She received 2 W2s. A standard one from her employer. And a second one for "Supplemental W2 Disability Benefits". Say her total benefits were $1000(for illustration only)

Now here is the issue:

Her standard W2 includes $1000 as "Third partty sick pay" towards "Reported W2 Wages" which appears in Box 1 -wages tips and other compensation.

The other W2 - "Supplementa W2 Disability Benefits" has $300 in box 1 and $700 in box 12a(with code J, which from my understanding is considered not taxable)

So I have 2 question:
How can she be double-taxed for disability income? If not how can she not report the $1000 from her regular W2 since its part of total reported w2 wages?

Also it seems like only $300 should be taxable anyway(not the entire $1000)

I would really appreciate anyone helping me out with this issue. Thanks in advance.

-Micky

This seems to be a HOMEWORK question, which we cannot answer under the guidelines of the forum.

Sorry!

Thanks for your response. I an not sure what you mean by homework question and also which guidelines will it violate.

When you stated the benefits was $1,000 "for illustration purposes", that is a tipoff that is a question from a homework assignment in a tax course.

The forum admin does not want us to answer such questions. Sorry!

I can see why that might have misled you. I only used the term 'illustration only' because of privacy concerns.
Anyway I figured it out myself. For those who might find themselves in similar position this is what finally came out of this situation. Turns out it was a mistake on part of payroll.
The $1000 should not have been added to the w2 wages. It is being corrected where only $300 will be added to total wages and the rest $700 will go into box 12 with code 'J'.
The 'supplementary w2' should not have been sent to us anyway. It belonged to the company where medicare and SS taxes were deducted for companies share for $300 with the rest $700 in box 12 under code 'J'.
Once we get the corrected w2, I wdhould be able to file with no issues.

Lessons learnt:
- Double check you w2 before filing, payroll can make mistakes.
- Don't wait until the last minute for taxes.
- If advice is required urgently, pay someone for advice instead of posting on free advice boards.

Sorry for the confusion.