Tax Information for Employers - State Plan
Benefits payable under the Temporary Disability Benefits Law are considered to be "third party sick pay." Federal law provides that the portion of gross disability benefits paid, which is attributable to the chargeable employer's contributions for disability insurance coverage, is subject to Social Security, Medicare, F.U.T.A. and federal income tax.
Based on the chargeable employer's average experience rate for State Plan temporary disability insurance during the most recent three years, the Division calculates the worker's portion of Social Security (FICA) contributions and Medicare contributions of each benefit authorization. That amount is deducted from the benefits to be paid to the claimant and is forwarded to a federal depository. To calculate the FICA and Medicare contribution which you, the employer, must remit to the federal government, refer to the "Taxable Amount FICA" column on the Division's Form DS-7C, "Notice of Disability Benefits Charged or Credited." The figure in this column specifies the portion of benefits to be used in calculating the employer's contribution at the applicable employer rate.
Upon the claimant's written request, a federal income tax deduction may also be made from the payable disability benefit gross amount. This deduction is indicated on Form DS-7C in the "Federal Tax Withheld" column. The employer is not required to match this withholding amount.
Questions pertaining to your payment of F.U.T.A. taxes on the portion of benefits which is attributable to your disability insurance contributions as an employer, should be directed to the Internal Revenue Service. The Division makes no deduction from benefits to meet employer F.U.T.A. liability.
It is the chargeable employer's responsibility to issue Form W-2 to employees who receive third party sick pay. As a courtesy, employers are provided with a year end summary of benefits paid and the corresponding tax information. The year end statements are mailed prior to January 15th of the new year.
Temporary Disability Benefits are not subject to New Jersey State Income Tax.
Based on the chargeable employer's average experience rate for State Plan temporary disability insurance during the most recent three years, the Division calculates the worker's portion of Social Security (FICA) contributions and Medicare contributions of each benefit authorization. That amount is deducted from the benefits to be paid to the claimant and is forwarded to a federal depository. To calculate the FICA and Medicare contribution which you, the employer, must remit to the federal government, refer to the "Taxable Amount FICA" column on the Division's Form DS-7C, "Notice of Disability Benefits Charged or Credited." The figure in this column specifies the portion of benefits to be used in calculating the employer's contribution at the applicable employer rate.
Upon the claimant's written request, a federal income tax deduction may also be made from the payable disability benefit gross amount. This deduction is indicated on Form DS-7C in the "Federal Tax Withheld" column. The employer is not required to match this withholding amount.
Questions pertaining to your payment of F.U.T.A. taxes on the portion of benefits which is attributable to your disability insurance contributions as an employer, should be directed to the Internal Revenue Service. The Division makes no deduction from benefits to meet employer F.U.T.A. liability.
It is the chargeable employer's responsibility to issue Form W-2 to employees who receive third party sick pay. As a courtesy, employers are provided with a year end summary of benefits paid and the corresponding tax information. The year end statements are mailed prior to January 15th of the new year.
Temporary Disability Benefits are not subject to New Jersey State Income Tax.
