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featurefl
January 13, 2025
Question

Reporting a Worker's Compensation Wage Claim on the W-2

  • January 13, 2025
  • 1 reply
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Looking for the correct way to report a non-taxable worker's comp wage claim on the W-2.  Wages were paid directly to the employee by the company, and later reimbursed by the WCC carrier.  We initially used box 12 with letter code J (since it was reimbursed by a third party).  Quickbooks Assisted Payroll cannot answer the question and says it is "not possible to talk to the tax team."  More like "UN" assisted payroll!  How have others handled this?

    1 reply

    E
    ElijahStownton
    January 29, 2025

    Hello,

     

    Normally, if a third party (like the worker’s comp carrier) paid the wages directly, then Code J would be the right call, and those wages wouldn’t be subject to Social Security, Medicare, or FUTA taxes. But since the company paid first and got reimbursed later, you might need to report it differently.

     

    A couple of things to check:

     

    1. Some states handle workers' comp wages differently, so it’s worth checking if you require them to be excluded from state wages (Box 16) while still being reported in Box 12.

     

    2. If your company initially withheld payroll taxes on these wages, you may need to make adjustments. Depending on when and how the reimbursement happened, there’s a chance those wages should have been subject to payroll taxes at the time of payment, even if they were later reimbursed.

     

    3. If QuickBooks won’t allow you to enter it properly, you might have to manually adjust payroll tax filings (941/940) or even issue a corrected W-2 (W-2c) later if needed.

     

    I know this isn’t the answer you want to hear, but since QuickBooks isn’t providing real support on this, a CPA or payroll tax expert might be able to confirm how it should be handled in your specific case.

     

    I’d be interested to hear if anyone else has figured out a clean workaround within QuickBooks without needing to do manual corrections.

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