Final answer:
Nontaxable third-party sick pay is reported in Box 12 of the W-2 form with the code 'J'. This aids in accurate tax filing and affects the calculation of taxable income. Option b
Step-by-step explanation:
The nontaxable third-party sick pay is reported in Box 12 of the W-2 form. This type of payment is not subject to tax because it is typically paid by a third-party insurance company under a sickness or disability plan. On the W-2 form, various types of compensation and benefits are coded differently.
For reporting nontaxable third-party sick pay, you should look for the code J. This code indicates the amount of sick pay that is not taxable and is being reported separately to the IRS by a third party. It's important to accurately report this pay because it can affect the calculation of your taxable income when you file your tax return. Option b