WA PFML - does this sound right?

Forum|Forum|3 years ago
April 12, 2023
1 reply
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WA PFML's 1099-G guide for people who received family leave:

https://paidleave.wa.gov/app/uploads/2022/01/2022.12.1099s-insert.pdf

This makes it sound like the full amount they received is taxable, unless I am mistaken.

But I received this advice regarding my WA PFML medical leave (not family leave, no 1099-G issued) and wanted to confirm before I finalize my tax return:

"Generally if you pay for the insurance on post-tax dollars, then it would not be taxed when you receive the benefits. If you only paid a portion, or your employer paid all of the insurance premiums, then a portion or all of the benefits you receive are taxable income. According to the Washington State Department of Labor and Industries, an employer pays 26.78% and the employee pays 73.22%. Due to the fact that there is no guidance from the IRS on whether the benefits you receive for PFML are taxable or not, I would be more conservative in reporting it as taxable income. If you paid the premiums on post-tax dollars, then you may want to only include 26.78% of the benefits paid. If they were paid on a pre-tax basis, then all the benefits paid I would report as income."

Do you agree with this?

Thank you.

Not A Product Question

AmyC

Level 15

1. Agree. Disability insurance has had those rules for years. If you pay with post tax dollars, you don't pay for benefits.

2. Pre-tax dollars means actually not taxed. Like a 401k at work, those are pre-tax dollars. There is a difference between box 1 and box 3 on your w2. Your wages are on box 3 but the taxable wages are box 1.

You can ask your employer/ payroll if the amount is pre-tax or post-tax.

If it is post-tax, then I would keep the paystubs and proof and claim only the percentage you did not pay.

If pre -tax, all taxable.

[Edit 4/13/2023 11:37 AM]

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NaySaoAuthor

Level 4

@AmyC

Thank you for responding! I am a little confused because some of what you said conflicts with the first person, I think, so I'm having trouble understanding.

My employer said it was paid with pre-tax dollars. Box 1 and Box 3 are the same amount. I'm not sure what that means.

I paid much less in premiums than what I received in benefits.

I have been told to treat it as taxable income on this forum previously, although WA State says that it may not be but they have no idea since the IRS hasn't given them any guidance.

I looked at the PFML 1099-G guidance for their family leave (they did not provide any for medical leave) here: https://paidleave.wa.gov/app/uploads/2022/01/2022.12.1099s-insert.pdf

And under the 1099-G "Instructions For Recipient" Box 1, the last line states, "If you do not itemize, only include an income the amount that is in excess of your contributions."

I believe this aligns with what you said.

Would you agree that I should deduct my 2022 PFML contributions from the total PFML income I received that year? (Even though medical leave didn't provide me with a 1099-G.)

Thank you.

NaySaoAuthor

Level 4

My employer went back and forth with their answer so I had to do the math for them. Therefore I have updated my original post and my reply with my follow-up clarifying questions.