There are many variables on the taxation of PMFL benefits paid under a state insurance program. The IRS has not definitively ruled on specific state PMFL programs. Generally for MA, amounts withheld from employee pay are shown in box 14 and those amounts can be treated as state/local taxes paid and an itemized deduction. Therefore any benefit amounts (shown on 1099G) paid would be a refund of taxes paid. If you typically use the standard deduction then any refunds (amounts shown on 1099G) would not be taxable.
Enter this as a "Refund of State/local taxes paid" in the "Other Common Income" topic. If you itemized last year then you will be asked information from that return to determine if any of the box 1 amount is taxable.
Be advised at this time, the IRS has not specifically ruled, however, in some circumstances in MA the employer has paid a portion of PMFL premiums, if there are more than 25 employees. Benefits paid from that portion of the PMFL contributions would be taxable. Once the IRS makes a ruling the handling of these payments may change.
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