When your employees become sick or are injured and fill out a claim form for disability benefits, the Fund sends a form to you as the employer. Additional information will be requested periodically from the employer to continue the benefit payments.
By law, since these payments are considered third-party sick pay, we are required to deduct and deposit the employee portion of Medicare and Social Security Taxes. It is your responsibility to pay the employer’s portion of these taxes. To enable you to do this, we send you a number of notices during the tax year to insure that you have adequate notice to report these amounts on your 941s and on the employee’s W- 2.
Each week that one of your employees is paid a disability check from us, you will be sent payment details of that check, including taxes withheld, on a computer generated letter. All employees will be listed on the same letter. Any negative payment details represent repayments to the Fund by your employee for overpayments or legal settlements.
At the beginning of each quarter we will notify you of all payments made by the Fund for weekly disability benefits to all employees during the previous quarter. These computer-generated letters will list each employee and each check and tax detail sent during the quarter.
During the first week of January we will provide you with details of all checks paid during the previous year to assist you in preparing your W-2s. You may either include these third-party sick pay totals along with the employee’s wages on the same W-2 or you may issue a second W-2 to the employee.
If you use an outside payroll service, please notify them that you will not be able to give them your third-party sick pay adjustments until January. They routinely advise their clients that they need the adjustments prior to the end of the year; however, we pay claims until December 31 and therefore cannot provide this information until the first week in January.
For additional information regarding the deposit and reporting requirements of third-party sick pay, please refer to Publication 15-A (Employer’s Supplemental Tax Guide) from the IRS.