How to enter Connecticut paid leave benefits from 1099-G and mark as disability for self to not be taxed per the IRS guidelines

[haggard-neil]

I do not see a spot in Turbotax for entering information for a 1099-G but to set as disability benefits which are non-taxable so Turbotax is treating it as taxable income

[ReneV4]

No. There is no spot in TurboTax to set CT paid leave benefits as non-taxable. 

According to the IRS, you must include in your income sick pay from any of the following:

• A welfare fund
• A state sickness or disability fund
• An association of employers or employees
• An insurance company, if your employer paid for the plan
   

Therefore, you should enter the Form 1099-G information as it appears.

Before you finalize your return, you can check with your company because your employee contributions should not have been included in Form 1099-G.

Here is a link to the Connecticut Paid Leave site's Frequently Asked Questions.

Here is a link to the IRS Frequently asked questions regarding reporting of disability payments.

Here is a link where the IRS issues guidance for the District of Columbia and states that have paid family and medical leave ....

[haggard-neil]

Thanks for responding, although in researching this I am not seeing the same interpretation you have presented.

In the FAQs from CT Paid leave it specifically states that if it's for your own serious health condition, it is not taxable since the CT Paid leave program is 100% funded by the employees.

For those same reasons, in the IRS documentation, they also state that it is not taxable if it's employee funded and for your own serious health condition.  They treat it as an insurance payment but since none of it was paid for by my employer, the benefits I receive from the state are not taxable.  In the IRS bulletin 2025-7 in the analysis section for scenario 3, it specifically covers this as well as summarized in Table 2 below that.

In another spot, I finally found the answer on how to handle this in Turbotax.  I had to enter the amount in box 1 of the 1099-G as an adjustment in other reportable income (which then shows up on schedule 1, part 1, line 8z on the 1040 form with an explanation that it is a 1099-G adjustment).  Turbotax then calculated everything correctly to match what I manually had done.