PFL W-2 Box 16 Stage wages cannot be less than State withholding

[solarkai]

I was on paternity leave (Paid Family Leave) last year and received payment from an insurance company. I have received the W-2 and 1099-MISC forms from that insurance company. The W-2 form have $0 for box 16 but has a value for box 17. TurboTax kept throwing the error that the "Box 16 State wages cannot be less than State withholding..." message. Accordingly to the insurance company, they have taken out state taxes from my payment but they don't report wages to New Jersey because NJ does not consider disability wages as income. I'm at a loss as how to resolve this issue. If I enter the W-2 Box 1 value for Box 16, then my NJ refund goes to the negative, Is this the correct way? Box 13 have "Third-party sick pay" checked and I have selected "Paid family leave" in the uncommon situations page. Would greatly appreciate any help/suggestion on this.

[MaryK4 · Accepted solution]

The Box 17 amount was withheld for state tax withholdings so you want to get credit for the payment on your New Jersey return.  You can either add the Box 17 amount to the W2 from the employer if you got one for 2024 OR enter it as State estimated payment in Deductions and Credits.  

[solarkai]

Thanks for the quick response! I do have a W-2 from the employer as well, if I add the Box 17 to the employer's W-2 (or the other option you suggested), do I still file the insurance's W-2 (just without the Box 17 info since it's moved elsewhere)? I assume the employer's W-2 doesn't include the wages and taxes from the insurance's W-2.

[SJMiles12]

@solarkai @MaryK4  -

i  have run into the same problem reported by solarkai. i could not figure out the state estimated payment in deduction and credits. @solarkai - how did you finally resolve this ?

[DianeW777]

Here are the steps to add the state withholding under deductions and credits.

1. Start by selecting   Deductions & Credits. 
2. In the Estimates and Other Taxes Paid section, click on the Start/Update box next to Estimated Tax Payments.
3. On the next screen, Income Taxes Paid (or Other Income Taxes) scroll to Other Income Taxes Paid in 2024
4. Click on Withholding not already entered on a W-2 or 1099, Start/Revisit 
5. On the screen 'Tell us about any tax withholding that you haven't entered yet' 
6. Next to the type of tax payment (Federal, State, Local). Enter your payment(s) 

@SJMiles12