Is New York Paid Family Leave taxable in New York state (or New Jersey where I live)? i need to file in both states but unclear on how the states treat this income.

[Anonymous]

I received NYPFL this year as my employer is in NY and I live in NJ. I file both forms and there is some reciprocity between the states for income taxes. Is this treated as taxable income on both forms?

[LenaH]

New York and New Jersey does not have a reciprocity agreement. If you live in New Jersey, your entire income is taxable in New Jersey. Then, on your non-resident return for New York, you will pay tax on your New York sourced income. New Jersey will then credit you on your resident return for the taxes paid to New York. 

As a nonresident of New York State, you are subject to New York State tax on income derived from New York State sources. Since your paid family leave solely resulted from your employment in New York State, then it would be reported on your nonresident return.  

[Anonymous]

Ok, I will put it on the NY filing but should it also be on the NJ filing? Is this income subject to tax in NJ? I read they don’t take Paid Family Leave.

[ErnieS0]

New York and New Jersey treat family leave differently. PFL is taxable to NY but not to NJ. As a result, you will be taxed on PFL on your nonresident NY income tax return. However, the amount should not show up on your NJ resident tax return. And you would not be able to claim a credit for NY tax paid on PFL.

Related Resources:

• New York State Paid Family Leave
• Your Guide to Family Leave Insurance in New Jersey

[johnh24]

Hi,

How would this be reported on your NJ forms? I received a 1099-MISC from my employer (NY based), but am an NJ resident. I entered PFL as other income on my federal return, but it carried this over to my NJ return and I cannot delete it. 

Any suggestions on how to be sure this is not captured with my NJ state?

[ErnieS0]

In New Jersey go to Other Non-Wage Income. You will see a Description and Amount from your employer’s 1099-MISC.

Enter another line, Non-taxable NY Paid Family Leave in the description and the same amount as a NEGATIVE.

Family Leave Insurance benefits are subject to federal income tax and to federal rules on reporting income and paying taxes. Family Leave Insurance benefits are not subject to New Jersey state income tax.

Related Resource:

Your Guide to Family Leave Insurance in New Jersey

[lg-98]

Hi @ErnieS0, a couple of questions. 

1. Similar to @johnh24, my wife and I live in New Jersey and work in New York. I entered my wife's NY PFL as other income on our federal return, and it carried over to my NJ return, but I could not delete it from New Jersey's Other Non-Wage Income. Per your suggestion I added a new line with "Non-taxable NY Paid Family Leave" as the description and the same amount as a negative. This, however, caused my NJ return to be rejected when I e-filed it because "the amount cannot be negative". See the screenshot attached below.

Is there another way to remove NY PFL from New Jersey state taxable income?

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2. Separately, per your previous message "PFL is taxable to NY but not to NJ. As a result, you will be taxed on PFL on your nonresident NY income tax return. However, the amount should not show up on your NJ resident tax return. And you would not be able to claim a credit for NY tax paid on PFL."

However, the PFL amount is used on NY form IT-203 for the calculation of NY taxable income on line 16 and NY tax, which in turn are used on form NJ-COJ to calculate the Maximum allowable credit from other jurisdictions. How can I ensure I am not claiming credit for NY tax paid on PFL?

To get the correct "Income properly taxed by both New Jersey and other jurisdiction.", should I go to "Summary of Taxes Paid to Other States", edit the line for Double-taxed income, subtract the PFL amount (say $5) from the New York Amount (say $15), and then input the result (say $10) in the Amount if Different field?

Thanks!

[jaredih1]

Hi Ernie-

I basically have the same question that you’ve addressed but wanted to follow up with my specifics. I live in NJ and work in NY. My wife and I were both had parental leave and received the following:

- 3 W2s related to PFL or disability. All were marked as sick pay in Box 13 and noted NY as the state Box15. 

- 1 1099-MISC related to PFL. It was noted as Other Income. The income amt was noted in the state income box (there was no     state withholding), but no state was noted (not sure why but should be NY like the others.)

As you stated and was my understanding previously, this income is taxable in NY, but not in NJ. However, like some of these other folks, this income is being included in Gross NJ Income after completing the federal and the two state returns in TurboTax.

A few questions:

Why is it including gross income for my NJ return? Is that how it should be and then gets subtracted/deducted out or should it not be included in the first place?

If it needs to be subtracted/deducted, how do I do that?

   - Re: 1099-MISC income: I saw you suggested entering a negative for the corresponding Other Income and the person you responded to got an error message saying you can’t have negative amount. Can you please address that as I would expect to run into the same issue?

   - Re: W2 sick pay income-how do I remove that from NJ income?

Thanks for any help you can provide!

[lg-98]

Just wanted to post an update on how I was able to move forward with my situation after talking to a Turbotax specialist.

Here's how I was able to talk to a specialist: click the Help icon on the top right >> type "Talk to a specialist" in the chat >> the AI will ask you "tell me what you need help with?" and point you to existing answers based on what you respond >> if the suggested answers are not what you were looking for, when the AI asks "Did that answer your question?" choose "Not really" and follow the steps to talk with a specialist.

Option 1 - More accurate but not preferred as it requires paper-filing

If you are okay with paper-filing, you could do the following things:

1. In NJ "Other Non-Wage Income", zero out the 1099-MISC NY PFL amount by entering the same amount as a negative on a new line.

• The Turbotax specialist I talked to explained that if you paper-file this won't be a problem as the IRS person reviewing your return would understand what you are trying to do. However, the e-filing system does not accept negative amounts. Also, I was advised that reducing the amount carried over from the federal return would increase your chances of being flagged for audit by the e-filing system. This is because in normal circumstances the state income should not be lower than the federal income.

2. At the same time, in" Summary of Taxes Paid to Other States" manually subtract the NY PFL amount from the total NY income as this number is used in Schedule NJ-COJ box 1 for the calculation of the allowable credit for taxes paid to NY.

In other words, you don't let NJ tax you on NY PFL but also you shouldn't claim credit for it.

Option 2 - Slightly less accurate but preferred as it allows e-filing

1. In NJ "Other Non-Wage Income", keep the 1099-MISC NY PFL amount as is.

2. At the same time, in "Summary of Taxes Paid to Other States" do claim credit for NY PFL by leaving the total NY Amount as is. No action needed here as the total NY amount automatically carries over from your NY non-resident form.

In other words, you are letting NJ tax you for NY PFL but you are also claiming credit for it, which pretty much evens things out.

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I went with Option 2. My total NJ tax ended up being $6 more than what it would have been with Option 1, because including the NY PFL amount pushed part of my income to the next tax bracket in NJ. At least e-filing went through and it should not raise any red flags. Hope this helps.

[karan8886]

Same situation: Work in NY but live in NJ and received NY PFL benefit. 

I am clear on the tax implications for NJ. But have a question for NY state tax.

My current understanding is that the PFL benefit needs to be added to the federal AGI, while computing NY state tax. Does it also need to be added to the New york amount. Thereby raising the new york sourced income and leading to a higher tax liability for NY.

Thanks. 

[DMarkM1]

When you enter the paid family leave as form 1099-G or 1099-Misc it is added to your FED AGI automatically. However, since you are filing a non-resident NY return you must allocate the portion of Fed AGI that belongs to NY.   

Since it is NY PFL you will allocate the amount to the NY box on the NY Income allocation pages, using the "non-resident other allocation" topic (unemployment compensation if it is 1099G or Miscellaneous income for form1099-Misc).    

[Lawrence V]

I received a 1099-G from NYS reporting paid family leave benefits that I received.  The payer is the New York State Insurance Fund which has a payer tax ID different from the NYS department of labor which pays actual unemployment benefits.  After I entered the 1099 information, TurboTax wants to change the payer tax ID to the NYS DOL number and will not let me leave as is.  This seems incorrect.

Help!

[FangxiaL]

Enter the identification number for the NY Department of Labor (DOL) as the payer instead.   

@Lawrence V

[hadi224]

Hello,

I also live in NJ but work in NY where my territory customers are.

I received both:

#1) a 1099-MISC from Hartford benefits for 6 weeks of STD under NY state (does not reach 80% of my salary) + 12 weeks bonding with the child under NY state.

#2) a W-2 from Sun Life insurance for the 6 weeks of STD covering the difference between what Hartford paid under NY state and 80% of my salary (I know, this is so complicated!).

Based on this thread, I am very clear on what to do with #1, the 1099-MISC. Thank you!

I don't see anyone posting about what to do with #2, the supplemental W-2. Weirdly, in box 15 of #2, the "employer's" (Sun Life's) state ID reported is NJ employee ID, not NY employee ID. Although box 16 (State wages, tips, etc.) and box 17 (State income tax) are reported as $0.00.

Do I need to report the #2 W-2 on my NY nonresident return, or only my NJ resident return? In the latter case, is NJ supposed to tax this W-2 paid for STD by the insurance? Thank you for any guidance on this.

[hadi224]

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