State tax filing

California defines Paid Family Leave as those dollars paid by the California EDD  (Employment Development Department) on a 1099-G, or from an insurance company engaged by your employer on a W-2 from the insurance company NOT your employer. PFL on your regular W-2 from your employer is almost certainly not tax-free PFL in the eyes of the CA Franchise Tax Board, no matter what your HR department says.

Over the years, I have found that employers and HR departments have a very poor understanding of what tax-free PFL is.

To answer your question, the top line "Paid Family Leave" is almost certainly not box 16 on your W-2, if by "W-2" you mean the document from your employer.

Please review this write and pay attention to the screen shots:

Paid Family Leave (PFL) is income that is taxable on the federal return but is non-taxable on the California state return if it

• is paid by the state's Employment Development Department (EDD) and appears on a 1099-G form –OR–
• is paid by an insurance company under a Voluntary Plan for Disability Insurance (VPDI) and reported on a W-2 from the insurance company.

To repeat: PFL is not included in your employer's regular W-2 but on a separate W-2 from the insurer.

Amounts called “PFL” that are paid by your employer and which appear on the W-2 from your employer (see last image below) are taxable both on the federal level and by the state of California.

When you mark a W-2 in TurboTax as being PFL, a screen about PFL appears in the California section of the interview.

**W-2 Interview**

**California Interview**

The amount of wages on the W-2 marked as PFL is displayed so you don't have to look it up, but you are asked enter the amount (if any) that was paid by an insurance company, and not your employer.

If none of the amount was paid by an insurance company but all of it was paid by your employer, then you must enter zero (0) in the wages box on this screen, because any amount reported by your employer in box 16 of a W-2 is considered by California as compensation for services or taxable fringe benefits.

Note that compensation for short-term disability, vacation days, sick leave, and other employer benefits are not considered to be tax-free PFL.

If so "so-called" Paid Family Leave was actually paid by the employer on the W-2, then do not check Paid Family Leave on the screen after you enter the W-2.