FMLA and PFL leave / W4 withholding

[PatricioE]

2025 will be much different than our 2024. We purchased a home at the end of 2024 and are expecting our first child in a matter of weeks. We file jointly but in past years we each withheld as single/married filing separately, to reduce how much we owed at the end, since we could only do standard deduction. 2025 will mark the first year we can itemize deductions from mortgage interest and claim child tax credit. My wife will also be receiving state benefits for FMLA/CFRA and PFL for 5-6 months and I will be receiving PFL for 2 months. 

What would be the best way for us both to fill out our W4's (possibly DE4 as well,) for 2025? As is currently, after itemized deductions, it appears we will not be owing this year, but we also want to consider our state benefits and would like to be close to 0 at the end of the tax year.

[Alicia65]

First off Congratulations on your new home and baby! How exciting and how smart to think ahead. As far as itemizing, If you are Married filing jointly your deductions have to exceed your Standard Deduction. For 2025 that is $30,000. httStandard Deduction vs Itemized 

You will receive a child tax credit that will come right off of the tax owed. 

Without knowing your taxable income it is hard to suggest how you should file your W4's 

W4 calculator 

PFL is taxed differently than other paid time off like sick pay or paid medical leave.

It's also different from Family Medical Leave Act (FMLA) time off, which is unpaid and has no effect on your taxes.

For PFL it is usually reported on a 1099-G. When benifits are provided through your state they are usually taxable to Federal and State taxes.

The calculator provided should give you a good idea how to file. Remember Married filing jointly will take less tax per paycheck than married filing separate. Also remember there are Income limitations to the child tax credit. 

• Married couples filing jointly must have an adjusted gross income (AGI) under $400,000.
• IRS Child tax credit 

Again Congratulations!

[KatherineS63]

Congrats on the upcoming new addition to your family !! How exciting!!

My suggestion would be first to maybe do a tax estimator.  Here are two sites where you can do that:

IRS Tax estimator This is a tax estimator that will time out so enter and print findings all at one sitting.

Tax caster  This is another tax estimator that will time out so enter and print findings all at one sitting.

This will give you an idea of what to expect when you do your taxes for 2025.  

Then, if you need to change your W4s, you can use these links:

How to fill out a W4  Instructions on how to fill out a W4

W4 calculator  Use to help fill out a W4

Form W4  Actual W4.  Line 4c is where you would add extra withholdings from each check.

If you make changes to your W4s, you can do as many tax estimators as you like after you have made the changes to see how those withholding changes are making the amount owed or refunded go up or down.

For the state, it is hard to find an estimator but you could figure the tax rate for the state and do the estimate yourself.  You could also call your state and ask them how they would suggest you figure out an estimate.

I hope you have found this information helpful.

Katie S

[PatricioE]

Thank you for your response. I should have mentioned our expected gross income. Im expecting to make approximately $160k in 2025 (this includes bonus). My wife is expected to bring in $91k, before PFL. CA does not tax PFL, and will cover  70% of her salary, the other 30% will be from sick/vacation hours from her employer for 5-6 months. We max out our IRA's, so $15k jointly. I also max out an HSA, $4300 for 2025. 

[KatherineS63]

When you do the tax estimators, this will take into account the HSA and PFL. 

When you speak of IRA contributions, does your company have 401K plans?  In most situations, it is best to max out the 401K.  If you are under 50, the max per person is $23500.  If you are over 50, there is a catch up and the max is $31000.

As you can see, if both of you max out on your 401K, the total would be $47000 (under 50) and $61000 (over 50).  These numbers are for 2025.  Contribution limits change yearly.

As for the HSA, the contribution limit for 2025 is $4300 for self only policies and $8500 for family policies.   Contribution limits change yearly.

[PatricioE]

No, unfortunately we are not offered 401k through either employer.