Should PFL wages be deducted on my CA 540?

[hmucha]

I have the same problem with 2015. I must have checked that checkbox. In 2015 I was paid with Paid Family Leave, so it is very confusing that I'm not supposed to check "I earned all or part of this income as Paid Family Leave". Can TurboTax reimburse us for interests, as well as time spent on this issue?

My question is, what am I supposed to put in Schedule CA (540) Box 7 Column B / Schedule CA Line 7 Box 8 Paid Family Leave (PFL) Benefits?

Currently my 2015 return has my entire W-2 in those 2 places which is incorrect. But what should I put there? I don't think should be zero. For other years where I was on maternity leave, those two places are not zero.

[Lisa995]

""I earned all or part of this income as Paid Family Leave"."

This question is referring to the W2 you received from your employer.   

Did your employer include PFL in your W2 or did you get paid PFL from the State of CA?

If you were paid by the state of CA, you would NOT check that box, the software already makes that adjustment automatically.  The only time you would check the box for the above question is if your employer paid your PFL in a paycheck and you didnt collect PFL from the State of CA.

TurboTax will not cover any interest or penalties for this type of data entry

error, sorry.

[Critter]

The program asks you a straightforward question (also mentioning that this is unusual) when it asks you to check all that apply .... so if you answered the question incorrectly then that is your error not the program's. 

If you did not know for sure then you should have researched the answer or asked the employer or  contact TT support or at least post in this forum  ... in my opinion if you are mature  to have a baby then you are mature enough to ask for clarification  before you file the return. 

[devonlambert]

Did this ever get a proper answer.

Judging from the responses here, this was a clear UI issue with Turbotax. We turn to the application to help us with tax issues. 

It is uncommon to receive wages for Paid Family Leave. Not every employee provides this. So its not that far off to assume that someone would check that box. 

[2015user9]

I agree with you, however there is one situation, the situation I happened to encounter, where checking this box is the correct thing to do yet TurboTax (the program) then does not go to adequate lengths to help you get the right result. It is when your PFL amount is included on your W-2 (in my case because my company uses an administrator to distribute the funds). The program actually assumes your entire W-2 amount constitutes your PFL payment and puts the onus on the user to correct it.

[Lisa995]

If you look back on this thread to the screen shot that Critter included showing the uncommon W2 situations, the second checkbox says:

"Paid Family Leave - I earned all or part of this income as paid family leave"

and you checked that box, are you saying you didn't ever get to a screen that let you input how much earned was PFL? 

If you never got a screen to enter the $ amount, then yes, this is a program flaw and should be reported.

[Lida6923]

Was anyone able to solve this???

[Lisa995]

What are you trying to solve?  this is a data entry error on the customers part by not reading what the question was asking....how it works was explained up further in the comments.

[georgep]

This is huge oversight in TurboTax 2015 software. It was misleading and directing to wrong data entry.

This software omission would cost a lot of people hundreds of dollars for interest. Shame on TurboTax!

[Skim104]

Did you ever get resolution on this? Same exact thing happened to me for 2016 tax year, which means Turbotax has had this error going on for years without remedy.

[BillM223]

As you probably know, California does not tax Paid Family Leave (PFL) Benefits.

PFL that is taxable on the federal return is excludable if it is paid by either 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. It is not included in your employer's regular W-2 but on a separate W-2 from the insurer.

It sounds like your PFL was included on your regular W-2 from your employer, not on a 1099-G or a separate W-2 from an insurer. It is both taxable federally and to the State of California.

As the TurboTax onscreen instructions point out, "Don't include PFL income that was paid directly by your employer. This type of income is normal taxable wages." Any amount reported by your employer in box 16 of a W-2 is considered by CA as compensation for services or taxable fringe benefits.

It may be that you received short-term disability pay rather than officially PFL under a Voluntary Plan for Disability Insurance (VPDI). Generally, excludable PFL kicks in after all of your employer-paid benefits (vacation, sick leave, short-term disability) have been exhausted.

California employers seem to use the term "paid family leave" loosely which causes taxpayers confusion when they discover when "PFL" is taxable and when it is not.

You may be able to appeal CA's penalty under the "first-time penalty abatement" law passed by CA in 2014. While this regulation (Section 19132.5) isn't easily spotted on the Franchise Tax Board's website, it requires the FTB upon request of a taxpayer to abate a failure-to-pay timeliness penalty when the taxpayer has paid all tax currently due and has not had a similar penalty in the prior 4 years. File a Form FTB 2917, Reasonable Cause -Individual and Fiduciary Claim for Refund, available at https://www.ftb.ca.gov/forms/misc/2917.pdf

[bloxtaxes]

Hello,

I want to thank you everybody who is still contributing to this thread. I have now been hit with my 2016 tax return NPA, and I am scratching my head like everyone else. I got a regular W-2 from my employer because I worked for a lot of the year. I would have entered it as written, I'm not even sure I would've checked the infamous PFL box. It wouldn't make sense! In any case, the wages were listed under box 16 of the W-2, so why would Turbotax overrule the fact that this is taxable, when the employer themselves are putting it in the right place? Are you saying Turbotax assumed for all of the year of 2016, I was only paid for my leave from the company I'm employed in? It just seems like I said I had PFL last year, and Turbotax assumed something about CA that made it deductible. This sounds like a programming error.

Could this be my fault? Well maybe, post-partum was not my brightest moment with lack of sleep and lack of personal space in general. However, that should not be the end of the issue. I would like to know if I can file a complaint with TurboTax on this, or at least if they keep records on what I actually did on the form to allow this to happen to me.

Thanks to the expert answers, which really are helpful, but it does not get to the crux of the matter of how income reported accurately on my W-2, and thus filed correctly in my federal taxes, somehow became a deductible in my state return?

I look forward to replies.

[SusanY1]

Generally, those adjustments are made through answers to questions in the state interview.  The only way for us to know for sure how the questions were answered in your interview would be to allow our team of experts specially trained in this to examine the data files and look to see if the problem was, in fact, a software related issue.  

If it wasn't, the team can explain to you how it did happen.  

To request this, file an Accuracy Guarantee Claim. Note that if we do find it is the fault of the software, and you file within the required time frame, TurboTax will reimburse your interest and penalties. If it wasn't the software, at least you'll have an explanation! 

Here is how to submit that claim so we can take a look and find out exactly what did happen: TurboTax Accuracy Guarantee Claim.

@bloxtaxes