Think of the WA PFML as short term disability insurance. If you pay the premium for short term disability insurance yourself and collect any money from it, it is NOT taxable, because you paid for the product.
If your employer pays for short term disability insurance as part of your benefits and you collect from it, then it is taxable because your employer provided it to you as part of your compensation.
The WA PFML is paid for by BOTH you and your employer, which is why there is confusion over whether it is taxable or not. The IRS has not provided WA state any guidance as of yet whether they will consider all, a portion, or none of it as taxable, which is why nobody knows for sure whether or not to report it.
So at this point there is not a right or wrong answer if we should report it or not. However, the reason I think most people that have discussed it here have chosen to report it, is because if/when they make a decision, if they determine it IS taxable and you did not report it, in addition to owing the back tax, there will most certainly be penalties and fines for not paying it in the tax year it was received. I'm not going to argue the merits if that is justifiable, tyrannical, or corrupt or not, it is simply reality. If you report it, and they determine it is not taxable (or a portion is not taxable) you can file an amended return to get it back.
