Form W-2 - Short-Term Disability Pay
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The information below will help you determine if Short Term Disability payments you received are taxable income on your return.

Per IRS Publication 525 Taxable and Nontaxable Income, starting on page 18:

Sickness and Injury Benefits

In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. However, certain payments may not be taxable to you. 

TIP: Don’t report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established.

Cost paid by you. . If you pay the entire cost of an accident or health plan, don't include any amounts you receive from the plan for personal injury or sickness as income on your tax return. If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. 

Cafeteria plans. In most cases, if you're covered by an accident or health insurance plan through a cafeteria plan, and the amount of the insurance premiums wasn't included in your income, you aren't considered to have paid the premiums and you must include any benefits you receive in your income. If the amount of the premiums was included in your income, you're considered to have paid the premiums and any benefits you receive aren't taxable.

Starting on page 19:

Other compensation. Many other amounts you receive as compensation for sickness or injury aren't taxable. These include the following amounts.

  • Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. See Court awards and damages under Other Income, later.
  • Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income.
  • Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy.
  • Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. This compensation must be based only on the injury and not on the period of your absence from work. These benefits aren't taxable even if your employer pays for the accident and health plan that provides these benefits.

You may also wish to refer to IRS Publication 17 Your Federal Income Tax (For Individuals), on page 50, for information regarding Sickness and Injury Benefits. Your employer or disability plan provider may also be able to help you determine the taxable amount of your pay.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.