Thank you for the reply! So this still doesn't really answer my whole question but that's not something anyone here could help with since it needs to come from the horse's mouth I think... I would have treated my leave differently, had the IRS just.... SAID SOMETHING. I would have qualified for a large portion of the leave to have counted as medical instead of family, but we went with family since we were gonna take it anyways, and it covered the entire duration, and now I'm going to pay a couple thousand dollars because the IRS can't seem to answer a simple question that TONS of experts seem pretty confident on? W. T. F.
This isn't exactly a surprise to me either, I understood when taking the leave that the tax situation wasn't super clear so I knew that by not earmarking the right % that I was risking not having enough come tax time. I will still be very much getting a large return whether this is taxed or not, so that's not the immediate issue for me personally.
My problem is that my poorly educated common sense tells me that it doesn't make sense to be taxed for withdrawing from a fund that I directly paid for, not indirectly through a big tax pool or whatever, but like, it was laid out:
--you take a voluntary chunk of your income, ~1% ("voluntary" now, in the sense that employers can opt out and plan their own)
--throw it in a big state account every year
--when comes your time, you take your leave, by withdrawing from the big state "account" you deposited your deduction into
--you keep paying dues and eventually you have paid your entire leave, yourself, as the system intends
some people will have already paid more than their leave amount, into the program, before they ever even receive any of that leave pay
--but yet, even though the Fed already took an income cut, at the SAME TIME i deducted my income to fund the leave I'm taking, they get to take it again from the leave? That I funded before I even got my net pay?
This feels like getting charged income taxes on my HSA account spending but I know I must be missing something...
