Third-Party Sick Pay
Enter third-party sick pay when an employee has received pay from an outside source that requires a separate W-2 form. Example: An employee needs a short-term disability leave of two months because of a medical condition. The disability insurance enables the employee to receive a partial salary for the leave period. The amount that the employee receives from the insurance company is reported as third-party sick pay.
Enter third-party sick pay to also meet the requirements of the Social Security Administration (SSA) and the Internal Revenue Service (IRS). Both agencies require employers to report any federal income tax that a third-party payer has withheld.
If an employee received third-party sick pay benefits during the tax year, select the third-party sick pay option in Box 13 of the W-2 form for that employee. Enter third-party sick pay records for the employee so that the system selects this option on the employee's form. When you enter third-party sick pay records for an employee, the system updates the History Type field in the F06136 table with a 1 for each third-party sick pay record. To determine whether an employee received third-party sick pay during the tax year, the system uses the History Type field during W-2 workfile processing.
The JD Edwards EnterpriseOne system provides two methods for processing third-party sick pay information:
Process third-party sick pay records with your regular workfile build.
The system automatically creates separate W-2 forms for third-party sick pay, and updates the third-party sick pay option for each employee who has records with the history type 1 in the F06136 table.
Process a separate workfile build for third-party sick pay, and include only those employees who have received third-party sick pay during the tax year.
When you process a W-2 build specifically for third-party sick pay, you must first set the processing option in the Year-End Workbench program (P07810) to specify that all of the employees that are included in the workfile have received third-party sick pay. The system updates Box 13 for all employees that are included in the workfile. If all employees in the workfile have not received third-party sick pay, do not use this option.
To create third-party sick pay records, you enter the amounts by employee, tax type, and tax area on the Third Party Sick Revisions form. The SSA requires employers to report federal income tax that is withheld by a third-party payer. The Federal A tax amounts that you enter using the Third Party Sick program are automatically reported in electronic filing.