Do not enter your information as a 1099-G unless you received a 1099-G. These forms may not receive the same tax treatment at the state level.
To enter Form 1099-MISC received instead of a W-2 for Paid Family Leave, in TurboTax Online:
- Go to Wages & Income
- Scroll down the screen until you see Other Common Income and click Show more
- Choose the Start on the 1099-MISC line
- Enter the info from your form into the corresponding boxes
- If you need to enter boxes 4–6 or 8–17, check My form has other info in boxes 1–17
- Click Continue
Answer the interview questions for this one-time payment:
- Does one of these uncommon situations apply?, Check None of these apply and Continue
- Did the __ involve work that's like your main job?, Check, No, it didn't involve work like my main job and Continue
- How often did you get income for __?. I got it in 2023 and Continue,
- Did the __ involve an intent to earn money, Check, No, it didn't involve an intent to earn money., Continue
If you enter the 1099-MISC following these steps, you will see the questions about work and the intent to make money.
If you answer "yes" to that question, TurboTax may create a Schedule C assuming the amount represents self-employment income.
If you are in California:
In California, Paid Family Leave (“PFL”) provides benefit payments to people who need to take time off work for certain family issues. PFL paid by the California Employment Development Department (EDD) is reported on Form 1099-G, while PFL paid through a Voluntary Plan for Disability Insurance (“VPDI”) is reported on a W-2, either through the employer or a third-party insurer.
Paid Family Leave (PFL) income is taxable on your federal return, but not taxable on your California State return if either of the following situations apply:
- It’s paid by the state's Employment Development Department (EDD) and appears on a 1099-G form
- It’s paid by an insurance company under a Voluntary Plan for Disability Insurance (VPDI) and is reported on a W-2 from the insurance company
If your PFL is reported on a W-2, you must identify the amount (if any) that was paid by an insurance company, and not your employer.
On the “Do any of these uncommon situations apply to this W-2?” screen in the federal interview, if you mark the W-2 as containing PFL, then TurboTax will display a PFL adjustment screen in the California interview, showing the total wages from the W-2 marked by the user as containing PFL, and asks the user to review and adjust the amount as needed. The screen also instructs, “Don’t include PFL income reported on a 1099-G. This will automatically be deducted from your California income.”
If none of the amount was paid by an insurance company, and all of it was paid by your employer, enter $0 in the wages box in the PFL adjustment screen in the California interview, because any amount reported by your employer in box 16 of a W-2 is considered compensation for services or taxable fringe benefits in California.
The California Franchise Tax Board regularly audits returns with this issue and adds back to California income any amount incorrectly identified as PFL that was paid by an employer as regular wages or was excluded twice by deducting amounts already excluded on Form 1099-G.
If you got a W-2 from an insurance company for PFL, then you do subtract it from California wages. If, however, your employer just paid regular wages in your W-2, then you don't subtract it from California wages and you should remove it from the amount in the California PFL screen.
Any PFL reported on a Form 1099-G will automatically be deducted from your California income. Don't deduct it separately on the screen where you deduct PFL from an insurance company or you will get a double deduction. Also, don't deduct regular W-2 wages as PFL.
See this California EDD webpage for more information.
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