Does anyone know what "Category" the CO FAMLI (Colorado Family Leave) withholdings fall under (reported for CO residents in Box 14)?

[rebet39]

I had income withheld for our state's family and medical leave insurance program, and I don't know what to select in the Category dropdown menu.

[rjs]

For the family leave withholding select "Other deductible state or local tax."

[laportefogman]

Is there a reason this is not called out directly in Turbo Tax like some of the other state programs? It is certainly more confusing this way ☹️

[rjs]

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@laportefogman wrote:

Is there a reason this is not called out directly in Turbo Tax like some of the other state programs?

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@laportefogman 

I don't know what TurboTax's reason is. I don't have any inside information. My guess is that it's basically inertia. The general category has always been there. When only a few states had family leave it was something novel, and they added an individual entry for each state to the list. When it became a lot of states, they stopped adding individual states, but they left the early ones in the list. They could remove the few individual states that are in the list, then no states would be "called out" individually. The list would be much too long if they listed every state individually, so they're not going to do that. But as I said, this is just my guess.

[mbishar]

I don't believe this is correct based on the following Colorado Guidance:

https://famli.colorado.gov/news-article/new-tax-guidance-from-the-co-department-of-revenue

Specifically, the Colorado Supreme Court case that decided on validity of FAMLI declared that they were not taxes but were premiums/fees. Since they are not legally considered taxes, they are not under the category of "Other deductible state or local tax".

[DMarkM1]

Yes, you are correct that "CO Famli" item in box 14 is not tax deductible, so the correct box 14 category is "Other (not classified)".  

The amount does not reduce taxable income reported in box 1 or box 16.  The box 14 entry is purely informational for the employer to let employees know what was deducted from their pay "post-tax" for the program.  

[wymanro]

Reading the documents from the Colorado Supreme Court at https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/initiatives/2019-2020/20... indicates that the CO FAMLI withholdings are considered taxes by the IRS and are thus deductible.  Colorado defines them as fees to get around TABOR.  Colorado governor Jared Polis has requested that the IRS clarify this issue...

Here's the paragraph clarifying this:

The Internal Revenue Service (the "I.R.S.") has determined that mandatory payroll deductions levied by the State of California to finance its Family Temporary Disability Insurance program are payroll taxes which may be deducted from federal taxable income under Section 164 of the Internal Revenue Code. SeeMemorandum, Office of Chief Counsel Number [removed] (July 28, 2006) (a copy is attached hereto). The I.R.S. based its determination that payroll deductions for such state- mandated "insurance" are taxes because they are mandatory and "imposed and collected for the purpose of raising revenue to be used for a governmental function that serves public purposes, namely, to allow individuals to take time off from work to care for a seriously ill child, parent, or domestic partner; or to bond with a new child." Id. The I.R.S. characterization of California's program matches almost perfectly the measure's proposed program for Colorado.

[Spino]

You are obviously right and as a Colorado resident I appreciate you posting this! Thanks.

[rjterry21]

On the only W2 of 3 that could be directly imported for having a box D Control number, Box 14 "FAMLI" was automatically preselected as "Other deductible state or local tax". That's what I'm using for the other W2's.

[DawnC]

Use Other - not classified for any items in Box 14 that are unknown.   @rjterry21