Submitted By: Jean
Answered: November 4, 2016 10:59 am

Is sick pay deductible?

An employee who receives sick pay is taxed on it. It is treated the same as other taxable compensation, which means it is taxable for income tax purposes and subject to FICA.

Employers who give sick pay to an employee can deduct the payment. Again, it is merely another form of taxable compensation.

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Tax Glossary

Nonperiodic distributions

A 20% withholding rule applies to nonperiodic distributions, such as lump-sum distributions, paid directly to employees from an employer plan.

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