WA state is only sending out forms for family leave, not medical leave and clearly state no tax advice. Taxable medical is required to be issued a form with the employee percentage not included in taxable income.
The IRS guidance states:
- An employee who receives state paid family leave payments must include those amounts in the employee’s gross income.
- An employee who receives state paid medical leave payments must include the amount attributable to the employer portion of contributions in the employee’s gross income.
- This latter amount also is subject both to the employer’s and employee’s shares of Social Security and Medicare taxes.
- The amount attributable to the employee’s portion of the contributions is excluded from the employee’s gross income, and this amount is not subject to Social Security or Medicare taxes.
ADP Payroll offers:
State Family Leave Benefits Paid to Employee:
- Amounts paid to the employee under the family leave provisions of the SPFML are to be included in the employee's federal gross income, regardless of whether the employee or employer paid the premiums.
- SPFML benefits paid to the employee are NOT considered wages for federal employment taxes, such as Social Security and Medicare.
- The state paying the benefits to the employee must file with the IRS and furnish to the employee a Form 1099.
State Medical Leave Benefits Paid to Employee:
- Amounts paid to the employee under the medical leave provisions of the SPFML are to be included in the employee's federal gross income UNLESS "time off from work is necessary because of the individual's own serious health condition, and the medical leave benefits that are paid…are, in fact paid as a result of the employee's own serious health condition."
- Amounts paid for the employee's own serious health condition are treated as amounts received through accident or health insurance. The taxation of such benefits are dependent on the percent of the premium paid by the employer and employee.
- Employees must include in their federal gross income, any amount received attributable to the employer state mandated premium percentage. For example, if an employer is required to pay 40 percent of the premium, then 40 percent of the amount received by the employee is subject to federal income, as well as employment taxes.
- Amounts received by the employee attributable to employee contribution percentage in addition to any percentage of employee contribution, as well as any voluntary payment by the employer of the employee contribution required by the employee, are excluded from the employee's federal gross income. For example, the state mandates the employer pays 40 percent of the SPFML premium and the employee portion is 60 percent. However, the employer voluntarily pays half of the employee's portion totaling 30 percent. The employee would still only be taxed on the state employer premium mandated amount of 40 percent.
Federal:
- Medical - percentage paid by employer is taxable.
- Family leave is included in income and fully taxed.
The law changes in January retroactively, the forms sent ahead of laws changing, all of it comes together to make it harder on the taxpayer. You may not have taxable income - if you paid the premiums, no tax on the medical portion.
References:
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
