State tax filing

@SL37 I had received a response and my claim was denied as the “TT software performed the calculation correctly.”  The analyst provided screenshots and so I’ll share the highlighted text from the screens. 

Some particulars of my case, Married filing Joint, received PFL benefits for a few weeks for bonding with child, no employer paid PFL or from insurance company, just EDD and my earned income.   

When entering my W-2 info, we were asked, “Do any of these uncommon situation apply to this W-2?  I had checked the box, “Paid Family Leave – I earned all or part of this income as paid family leave.”

Then, at the CA interview page  – Paid Family Leave(PFL) Income in California it states, “We’ve noticed that you’ve reported receiving PFL income on a W-2. California doesn’t tax PFL income that was paid by your employer’s insurance company. Review your PFL income below and adjust the amount(if needed) to reflect the total paid by your employer’s insurance company. “

ALL of my W-2 wages were then pre-populated under the “PFL Income Received From Insurance Company:  $$$$$$” because I had checked the PFL box

The print beneath the entry says, “Don’t include PFL Income that was paid directly by your employer. This type of income is normal taxable wages.”  I made no adjustments to the entry and kept on going.  That’s where I screwed up. 

Moving forward, the next screen addressed, “PFL paid by CA EDD on Form 1099-G – Your Unemployment Doesn’t Get Taxed in CA”  Highlighted text, “There’s nothing you need to do.”

So on to the CA Schedule 540.  Line 7 - Wages, Salaries, tips, etc., my unadjusted PFL income (all  W2 wages) was entered under SUBTRACTIONS as well as on the CA Wage Adjustments Worksheet under Line 8 Paid Family Leave insurance(PFL) benefits.

Line 19 – Unemployment compensation had Subtracted the actual amount that I had received from EDD as reported on the 1099-G.

And so, because I did not adjust the “PFL Income Received From Insurance Company” amount, it was subtracted from taxable wages, leading us to where we are right now.   I had assumed that TT was intuitive enough to catch/detect my ignorance, but I guess I get it.  I hope you all have a better outcome.

The analyst did offer another resource thru the FTB as far as attempting to have the penalty refunded and I will be giving it a try:

You may be able to appeal CA's penalty under the "first-time penalty abatement" law passed by CA in 2014. While this regulation (Section 19132.5) isn't easily spotted on the Franchise Tax Board's website, it requires the FTB upon request of a taxpayer to abate a failure-to-pay timeliness penalty when the taxpayer has paid all tax currently due and has not had a similar penalty in the prior 4 years. File a Form FTB 2917, Reasonable Cause - Individual and Fiduciary Claim for Refund, available at https://www.ftb.ca.gov/forms/misc/2917.pdf