Disclaimer: I am not a tax professional, attorney, or financial advisor. The information below is based solely on my personal experience and conversations with representatives. It should not be relied upon as tax or legal advice. Please consult a qualified professional or the IRS directly before making filing decisions.
I’ve spent over two and a half hours this week on the phone with both Intuit and the Oregon Employment Department trying to clarify the federal tax treatment of Paid Leave Oregon benefits. Here’s what I’ve learned so far — and where things remain unclear.
1099 Forms Issued
- If you received Paid Leave Oregon benefits for your own leave, the state issued a 1099-MISC.
- If you received benefits to care for someone else, the state issued a 1099-G.
Federal Taxability Question
I reviewed IRS Revenue Ruling 2025-04 (linked on the Paid Leave Oregon website) regarding the federal taxability of these benefits.
Based on my understanding of that ruling (and additional clarification I sought), the recipient may be responsible for paying federal income tax only on the portion of benefits funded by employer contributions.
For example:
- If an employer has more than 25 employees, the employer contributes 40% of the program funding.
- The remaining 60% is employee-funded.
- Under this interpretation, only the 40% employer-funded portion would be federally taxable income.
However, a Paid Leave Oregon representative told me something different — that the benefits count as income but are considered non-taxable income. That seems contradictory, and I’m hesitant to rely solely on verbal guidance to remain compliant with IRS requirements.
Scope of Issue
This appears to affect:
- Oregon’s Paid Leave program
- Washington’s state-sponsored paid leave program
- Potentially similar programs in other states
Contact with Intuit & State
- The Intuit representative I spoke with said the issue would be escalated internally for possible system updates but could not guarantee any changes.
- The Paid Leave Oregon representative also said they would escalate the issue on their end, again with no assurance of action.
At this point, I’m essentially in a holding pattern.
Possible Reporting Workaround (Not Yet Tested)
Some online sources suggest the following approach in TurboTax:
- Enter the 1099-MISC as received.
- Go to:
- Other Income
- Less Common Income
- “Other reportable income”
- Enter the employer-funded portion as a negative adjustment.
- Retain documentation supporting all calculations in case of IRS inquiry.
Again, I have not yet tried this method and cannot confirm whether it is correct.
