I went on Paid Family Leave last year and I only received money from the state of California (EDD). I did not receive money from my employer's insurance company. Am I supposed to file for the total amount I received from EDD?
Yes, you do need to declare your California EDD benefits as income on your tax return. But, there's a little more to it than that. Please keep reading for a full explanation.
Paid Family Leave benefits in California are paid by (or are channeled through) the California Employment Development Department. Any formal PFL benefits you received (such as being out on Paternity Leave) are considered taxable income by the IRS, because they consider PFL a type a unemployment compensation. However, for California state tax purposes, the PFL income is entirely exempt.
Because of this different tax treatment, the California EDD sends you a Form 1099-G. The same income should definitely not be been included in Box 1 (wages and other compensation) of your employee W-2 tax form. Thus, you don't enter your PFL benefits in the W-2 data entry screen. Instead, please use here only numbers from your actual W-2. The PFL benefits should be entered on the 1099-G data entry screen (and yes, for federal tax purposes, as well as the federal tax side of the TurboTax software, they are considered just the same thing as unemployment compensation).
If you have a W-2 from your employer (or you don't have one), and you have a 1099-G from the California EDD, then you don't need to wait for any more tax documents with respect to PFL, because you won't be receiving any.
That said, when in TurboTax, and assuming that your tax data on the W-2 and 1099-G is correct, you will want to enter your W-2 and 1099-G data into the program. When you do enter your 1099-G, as a California resident, and you get to the state module of the TurboTax program, the software should confirm that your 1099-G is indeed CA state-tax exempt. I've included a series of screen-capture images and attached them to this answer (please click them to open pictures). Your TurboTax screens might look somewhat different, depending on program version, but the process is the same.
In addition, here is a link to a CA EDD FAQ sheet. Please
refer to the bottom of Page 2 therein to confirm what I've indicated
about the taxability of PFL income.
Yes, you do need to declare your California EDD benefits as income on your tax return. But, there's a little more to it than that. Please keep reading for a full explanation.
Paid Family Leave benefits in California are paid by (or are channeled through) the California Employment Development Department. Any formal PFL benefits you received (such as being out on Paternity Leave) are considered taxable income by the IRS, because they consider PFL a type a unemployment compensation. However, for California state tax purposes, the PFL income is entirely exempt.
Because of this different tax treatment, the California EDD sends you a Form 1099-G. The same income should definitely not be been included in Box 1 (wages and other compensation) of your employee W-2 tax form. Thus, you don't enter your PFL benefits in the W-2 data entry screen. Instead, please use here only numbers from your actual W-2. The PFL benefits should be entered on the 1099-G data entry screen (and yes, for federal tax purposes, as well as the federal tax side of the TurboTax software, they are considered just the same thing as unemployment compensation).
If you have a W-2 from your employer (or you don't have one), and you have a 1099-G from the California EDD, then you don't need to wait for any more tax documents with respect to PFL, because you won't be receiving any.
That said, when in TurboTax, and assuming that your tax data on the W-2 and 1099-G is correct, you will want to enter your W-2 and 1099-G data into the program. When you do enter your 1099-G, as a California resident, and you get to the state module of the TurboTax program, the software should confirm that your 1099-G is indeed CA state-tax exempt. I've included a series of screen-capture images and attached them to this answer (please click them to open pictures). Your TurboTax screens might look somewhat different, depending on program version, but the process is the same.
In addition, here is a link to a CA EDD FAQ sheet. Please
refer to the bottom of Page 2 therein to confirm what I've indicated
about the taxability of PFL income.
I am in the same situation. Now I am doing the State part but the software is not confirming/asking about the PFL. How to add it?
I earned Paid Family Leaven for about 10 days in December 2019. I got the check from State of CA EDD and it was dated in January. I was confused if I should include the Paid Family Leave as part of my 2019 income. I called EDD and they said because the check was sent in January, the income will be part of my 2020 income. That didn't seem to make sense and asked for a Supervisor to call me back from EDD. No one has called and they are impossible to reach.
What do you think? I need to file my taxes per a financial aid deadline. Do I report the Paid Family leave in 2019 or assume it is for 2020. I have not recieved a 1099-G from EDD.
IRS form 1099-G is due to the taxpayer by January 31.
It sounds like the the EDD check dated in January of 2020 will be reported on next year's 1099-G.
@GeoffreyG I understand federal, but is there any reason at all why I should owe state taxes on Paid Family Leave even though it’s “entirely tax exempt” by the state of California? Because after filing the 1099G, that’s exactly what the TurboTax software is claiming.
There is no reason why you should be taxed for your paid family leave in California. It may have been the manner in which you answered the questions when you entered your 1099G in the federal interview.
At this point you may wish to contact a specialist that can work through that section of the return with you. The specialists can look at your return on their screen to find out exactly what is causing this issue and suggest how you can take corrective action if needed. It is impossible for me to identify the issue and how to correct it. I did enter a sample 1099G in my test program and I was able to get the exclusion.
One last thing, make sure you entered this under federal>wages and income>all income>unemployment>Unemployment and paid family leave. There are other 1099G sections so make sure you are on the right menu path.
What if you didn't go through the CA state EDD for this but the PFL was paid through my employer? Do I add up all my checks that had the line item "PFL wage replacement" or "PFL wage supplement" and then add that into the box on the state portion of turbo tax? I'm not sure what to do here. The "PFL wage supplement" had both fed and CA taxes taken out and the "PFL wage replacement" only had Fed taxes taken out.
The amount of taxable EDD benefits should be reported to you on a Form 1099-G. Any amounts ;reported on a 1099-G need to be reported on your Federal return. The benefits are not taxable to California.
California Employment Development Department Information to Help With Tax Preparation
I printed out my IRS return to discuss with my daughter. However, California State was not done. I am not happy with the info on my IRS and need someone to help me with this.
@megavdoyle Please review the following FAQ: How to e-file a state return after federal. If you are experiencing issues after attempting the previous steps, please take a look at this.
Hi @tsoto2020
What did yo do in this scenario?
I'm in same situation. I see my CA state wage is (IRS wage - PFL paid amount)
I've not received 1099g from both edd and employer. I doubt i'm getting one from there. I do not have account on edd as well.
How did you reported these last year?
Thanks in advance
Are you saying that (1) you received Paid Family Leave, and (2) it was not on a 1099-G issued by the EDD, but was included in your Wages on your W-2? (You made need to confirm with your payroll department that the reason that they subtracted the PFL from state wages is because the PFL amount is actual PFL that qualifies for exclusion in CA).
After you enter your W-2 in the federal return, the next screen asks (among a lot of other things) if you received PFL. Check "yes" if your payroll department has confirmed that this was PFL as approved by the state of California.
Then, in the CA state interview, you will be asked to enter the amount of Wages that were paid by your company's insurance carrier (because, presumably, your PFL was paid to your employer by their insurance carrier, and your company is just passing it through your W-2 to you). The box is probably already filled in with the value in Box 1 of your W-2.
However, what you want to enter in that box is the amount that will reduce your state wages to the amount that appears in box 16 of your W-2. While your federal income will include the PFL amount, your state income should not, so enter in this PFL CA screen, the difference between box 1 and box 16 on your W-2.
@BillM223 Thank you for your reply.
Yes, benefit amount is already added as part of Box1 and Box16 is less by the same amount. I received benefits for 8 days.
CA EDD did not pay me anything. My employer paid me directly.
I found same here as well https://www.lincolnfinancial.com/public/employers/insights/absenceadvisor/paidfamilyleave/california
Are PFL benefits taxable?
"Family Leave Insurance benefits are subject to federal income tax and to federal rules on reporting income and paying taxes. PFL benefits are not subject to California state income tax. Benefits paid directly from the State of California are reported on a 1099-G tax form. Benefits paid by Lincoln are reported on a W-2 form. "