topic On my CA state return, it mentions that paid family leave is being reported on my husband's W2. I located the amount, but how do you know if it needs adjusting? in Get your taxes done using TurboTax

On my CA state return, it mentions that paid family leave is being reported on my husband's W2. I located the amount, but how do you know if it needs adjusting?

elizabethasun — Wed, 17 Mar 2021 05:36:34 GMT

Re: On my CA state return, it mentions that paid family leave is being reported on my husband's W...

BillM223 — Thu, 18 Mar 2021 02:50:45 GMT

Paid Family Leave (PFL) is income that is taxable on the federal return but is non-taxable on the California state return if it

is paid by the state's Employment Development Department (EDD) and appears on a 1099-G form –OR–
is paid by an insurance company under a Voluntary Plan for Disability Insurance (VPDI) and reported on a W-2 from the insurance company.

To repeat: PFL is not included in your employer's regular W-2 but on a separate W-2 from the insurer.

Amounts called “PFL” that are paid by your employer and which appear on the W-2 from your employer (see last image below) are taxable both on the federal level and by the state of California.

When you mark a W-2 in TurboTax as being PFL, a screen about PFL appears in the California section of the interview.

**W-2 Interview**

**California Interview**

The amount of wages on the W-2 marked as PFL is displayed so you don't have to look it up, but you are asked enter the amount (if any) that was paid by an insurance company, and not your employer.

If none of the amount was paid by an insurance company but all of it was paid by your employer, then you must enter zero (0) in the wages box on this screen, because any amount reported by your employer in box 16 of a W-2 is considered by California as compensation for services or taxable fringe benefits.

Note that compensation for short-term disability, vacation days, sick leave, and other employer benefits are not considered to be tax-free PFL.

If so "so-called" Paid Family Leave was actually paid by the employer on the W-2, then do not check Paid Family Leave on the screen after you enter the W-2.

Re: On my CA state return, it mentions that paid family leave is being reported on my husband's W...

elizabethasun — Thu, 18 Mar 2021 03:40:34 GMT

@BillM223 Thank you! I think I am following. Turbo Tax is automatically inputting PFL on the CA return because the $ amount appears on Box 14 of the W2 as CA SDI (But....when filling in the W2 info, I didn't mark any PFL income received as a 1099-G wasn't received) I confirmed that this amount was paid by the employer directly, so I should change the $ amount to 0 on the CA return still, correct?

Re: On my CA state return, it mentions that paid family leave is being reported on my husband's W...

DaveF1006 — Thu, 18 Mar 2021 04:28:56 GMT

Yes, change the amount to zero.