Nontaxable Third Party Sick Pay is reported in Box 12, preceded by which code?

Nontaxable Third Party Sick Pay is reported in Box 12 of Form W-2 using code "J." This code indicates that the sick pay received from a third party is not subject to federal income tax withholding, which is an important detail for both the employee and the employer. Reporting this accurately ensures that the employee's tax information reflects their true earnings and any income that is not subject to taxation.

Understanding the significance of this code is crucial for payroll professionals because it affects how employees report their income and potentially impacts their tax liability. Ensuring that accurate codes are used on the W-2 helps maintain compliance with tax regulations and provides clarity for employees when filing their taxes.