Does anyone know how TurboTax automatically calculates your paid family leave income for your state taxes? It auto-populated our income somehow and we have no idea how.

[MarilynG1]

Your Paid Family Leave is probably shown on your W-2.

Click this link for more info on Reporting FMLA. 

[jasonthomasy]

Sorry, to be more clear, when I go to the "Paid Family Leave (PFL) Income in California" page, there is a number already pre-populated (redacted below)

I have also deleted my State Tax Return flow and started fresh a second time, and I got the exact same number pre-populated. I don't know whether I should use this number, or use the number that the Box 14's say on my W-2's, which are more 10x smaller than the number pre-populated by Turbotax here.

I have called in to an agent and was advised to go with whatever number the Turbotax software pre-populated. Is that the right course of action?

[jasonthomasy]

exact same number* (not time)

[MarilynG1]

Did you receive a 1099-G from California?

If so, and you entered it in TurboTax, that may be the amount you are seeing.  However, it is not considered Taxable Income in CA as it is on your Federal Return.

Click this link for more info on CA Paid Family Leave.

[jasonthomasy]

Yes, we entered 1099-G information but the number is off by an order of magnitude compared to the number that pre-populated.

[jasonthomasy]

I just noticed - the number that pre-populated was the sum of my Box 1 Wages and my wife's Box 1 Wages (the first 3 lines here). IS this a bug in the Turbotax software? Why is it summing these first 3 lines and using that sum to pre-populate as PFL income from an insurance company? (see screenshot above)

[MarilynG1]

Since we can't see your tax return in this forum, you may need help from someone who can.

Click this link to request Phone Support or How to Get a Live Review . 

[jtaylor85]

Hi there. 

I just had the same exact issue on my end where it had prepopulated this amount to include our household entire W-2 income which resulted in a massively different tax outcome at the State level for us depending on whether we leave it at the pre-populated amount or change it to 0 assuming that the State UE benefit is already backed out of income.

I personally think it appears to be a TurboTax bug based on what I am reading about further notes. 

Did you ever confirm with TurboTax whether this was a bug or not?

Thanks!

[Lodizzle]

• Was a solution ever found for this? going through the same problem.

[BillM223]

The amount that is prepopulated on the CA PFL screen is the the amount of Wages from your W-2. This is done as a courtesy so you don;t have to go back to the W-2 and look up the amount.

However, as the instructions on that screen state, you must alter this amount to be the amount of real PFL, i.e., that was paid by your insurance company. Note that it is unusually for real PFL to appear on your employer's W-2 - in California, it seems that the term Paid Family Leave is tossed around a lot, but only certain payments actually qualify - please read below.

***

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 are taxable both on the federal level and by the state of California.

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

@Lodizzle

@jtaylor85

[Lodizzle]

Thank you very much Bill. Extremely helpful and explained this confusing PFL tax information. As if parenting was not hard enough. we received pfl wages through our employer and did not receive a w2 from their insurance provider. therefore the income is taxable at the state and federal level. The state will back out the pfl income through the 1099g as we are in a state that does not tax the income. Hope this additional info helps someone!

[theoldbull]

So that seems like a BUG on turbotax's end. It should not be pulling W-2 wages into the CA PFL amount. Correct?

[BillM223]

Actually, it depends on who sent you the W-2.

If the W-2 was sent to you by the insurance company underwriting the Paid Family Leave policy for your employer, then, yes, the entire box 1 amount from the W-2 belongs in this CA screen.

However, it is unfortunately much more common that employees are told that they got PFL from their employer so it is included on their regular W-2 from their employer. 

In this case, you should put zero in that box on the California screen asking for PFL wages, UNLESS your employer swears up and down that part of the Wages on your employer's W-2 was actually a pass-though amount from the insurance company, in which case, you would enter only the pass-through amount.

The problem is that the term Paid Family Leave is used very loosely, and a great deal of what is called PFL in California is not actual PFL under state tax law.

As I note above (from July, 2020), you get PFL three ways in California:

1. a 1099-G from CA EDD (most common)

2. a W-2 from your employer's insurance company (less common)

3. A pass-through amount in your employer's W-2 (not common at all).

[mirandaw1]

It came up with a crazy high number for me and my husband when it should have been $0. We did have PFL around $15K combined, but it came up with a figure over $100K that it auto-populated in the box for employer insurance payments, which we had none of. Ours came from the Fed Gov. We can't figure it out either. Very bizarre.