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Submitted By: Jean
Answered: November 4, 2016 10:59 am
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
Withholding
An amount taken from income as a prepayment of an individual’s tax liability for the year. In the case of wages, the employer withholds part of every wage payment. Backup withholding from dividend or interest income is required if you do not provide the payer with a correct taxpayer identification number. Withholding on pensions and IRAs is automatic unless you elect to waive withholding.
