I took family leave in 2021 and received a W2 from Hartford stating "Third party sick pay" in Box 13. Federal tax was withheld.
I filed using turbo tax and it seems like TT has marked that as a deduction in Schedule CA 540.
Fast forward now 3 years later, I receive a letter from the IRS saying that that 3rd party sick pay that was marked as a subtraction for CA was actually taxable and wants me to pay tax now.
I checked my other returns for the other kids and all of them have it as a subtraction, so I am not sure why they are complaining only about this one.
Questions:
1. Is it accurate that paid family leave is taxable for CA ?
2. Also did I make a mistake in TT while filing state taxes so it did this incorrectly? Generally i get asked no questions for state other than state credit. So i am wondering what i missed.
Thanks.
