I was on paternity leave (Paid Family Leave) last year and received payment from an insurance company. I have received the W-2 and 1099-MISC forms from that insurance company. The W-2 form have $0 for box 16 but has a value for box 17. TurboTax kept throwing the error that the "Box 16 State wages cannot be less than State withholding..." message. Accordingly to the insurance company, they have taken out state taxes from my payment but they don't report wages to New Jersey because NJ does not consider disability wages as income. I'm at a loss as how to resolve this issue. If I enter the W-2 Box 1 value for Box 16, then my NJ refund goes to the negative, Is this the correct way? Box 13 have "Third-party sick pay" checked and I have selected "Paid family leave" in the uncommon situations page. Would greatly appreciate any help/suggestion on this.
