PFL claim pushing tax rate brackets

Forum|Forum|7 years ago
September 10, 2019
2 replies
26 views

Hello,

I am looking for a tax advice and here is my situation.

My wife and I are both employed and earlier this year I sold my RSU's which yielded very good profit. Our combined total income (Salaries by end of year plus profit from RSU/ESPP) is pushing to 32% tax rate bracket limit for Married Individuals Filing Joint Returns.

Now, we have situation where one of us have to take about 3 months (Oct, Nov, Dec) off from Work (for taking care of a ill family member) and it qualifies for PFL (paid family leave).

So now, we are wondering, if it is worth claiming from PFL from state of CA as it would push up above 32% and we end up getting taxed at 35% for Federal. Which is way more than the total compensation we get through PFL.

Question:

Do you think not claiming for PFL is a good idea ?
Have you seen other people do this to avoid higher tax rate ?

Thank you,

Taxnovice13

Critter

Level 15

If you will pay more in taxes than you will receive in PFL and you have the option to not take it then that is a choice you need to make ... personally I would not take it.

Anonymous

since tax rates are less than 100%, i would guess that PFL will exceed the additional taxes. but everyones tax situation is different.

put another way say the PFL puts you in the 35% bracket (your note) . at worst, that rate only applies to the additional PFL income not all your income. so you get to keep 65%. Then again no one is forcing you to take or decline PFL. you may end up with less than 65% because of the high state income taxes in CA by they too aren't 100%