Hi fellow community members, we have received a notice of proposed assesment related to my spouse's PFL benefit amount? Any ideas/ Insights would be greatly appreciated.

Hi TurboTax Community, I’m hoping to get some guidance from fellow members regarding a Notice of Proposed Assessment we received for our 2021 tax return (we file jointly). The notice relates to my wife’s salary during her maternity leave. On our Schedule CA (540), we noticed that her income appears in the subtractions column under the “Wages/Salaries” section. TurboTax seems to have identified this amount as Paid Family Leave (PFL) insurance benefits. Her W-2 shows “CA VPDI” in Box 14, which I understand refers to Voluntary Plan Disability Insurance. The amount in Wages/ Tips section matches the one listed in the subtraction column in schedule CA, and it’s the same amount the notice is referencing. We’re trying to understand: 1. Does this mean her PFL benefits were paid by a private insurance plan rather than the California state SDI program? 2. If so, are these benefits not tax-exempt, and should they have been included as taxable income? 3. What should be our next steps to respond to the notice or correct the return? Any insights or similar experiences would be greatly appreciated! Thanks in advance,

posted