Is 3rd party sick pay reported on a W-2 always taxable in Pennsylvania? Box 16 wages are reported as 0. Is my input wrong? Is ProConnect right?

[jsbucklewcpa-gma]

I am a new ProConnect user, but am I missing something?  With the help of 2 ProConnect support agents, I have tried every input combination we could think of.  Even though the box 16 wages are 0, ProConnect still identifies the W-2 from the insurance company as taxable compensation to Pennsylvania.  I have trial versions of Lacerte and ProSeries.  I have the same issue in Lacerte, but in ProSeries, I had no problem with the wages not being taxed on the PA return.  The PA Department of Revenue has confirmed to me this is not taxable income to PA and the guidance seems fairly clear to me - only sick payments that "represent regular wages" are taxable to PA (I assume that means they are reported on the W-2 from the employer, NOT the insurance company).  The payments represent short-term disability (premiums paid 100% by employer).  I actually have this same issue on this client's partner's return who received sick pay for COVID-19.

[sjrcpa]

In Lacerte for a field to be zero you have to enter it as minus 1, i.e. -1

I think ProConnect Tax works the same as Lacerte since they share the same engine.

[jsbucklewcpa-gma]

Thanks very much for your help - now that you mention it I think I did read that when I was going through Lacerte for the first time but I forgot about it.  So that solved the issue for me in the test return I setup in my trial version of Lacerte, but still did not solve the issue in ProConnect.  And I believe you're right about ProConnect in that it's based on Lacerte, so that's really weird why your solution didn't work for ProConnect.

[jgrattan]

Today I used the -1 input for the PA and Local wages and it appears to be working.