My employer mentioned PFL benefits are not included in box 16 - state taxable wages in W2 so in turbotax should I enter PFL income received as zero?

[raj236]

I took paternity leave for 6 weeks and my employer mentioned "PFL benefits are included as part of your wages in Box 1 that are subject to federal taxes, but are not included in Box 16 California state taxable wages.  You will not receive a separate 1099 for PFL wages."
So in turbo tax where it is asking me to enter "PFL income received from insurance company" should I enter the amount as zero since it is already taken care in W2?

[MichaelDC]

Did you also receive a 1099-G?

[raj236]

No, HR mentioned I wont get any 1099-G

[kp82]

no

[MichaelDC · Accepted solution]

I think you have in correct. If you can see that your Box 16 California wages are less than Box 1 federal wages by the amount of your PFL, then enter 0. (This seems to be how your employer described it in your question.)

If Box 1 and Box 16 are the same, then enter "PFL income received from insurance company" as the amount of the PFL.

Here's a great answer explaining your situation. Please feel free to post any additional details or questions in the comment section.

https://ttlc.intuit.com/replies/5798772

[raj236]

Thank you !

[MichaelDC]

More than a pleasure. Good Luck!

[clk87]

Where on my W-2 would it indicate how much of my federal taxable wages are attributed to PFL? (I do not have a separate W-2 for PFL.)

[TerryA]

Just to add some clarification - a TT/Calif resident return doesn't use W-2 Box 16 state wages for anything. It basically just adds them all up and enters the total on Form 540 line 12. That's it.

When PFL is administered by an employer's voluntary plan disability insurance (VPDI) it is sometimes reported to you on a separate W-2 and is included in your federal wages. On the federal W-2 entry screen there is a question where you can indicate this is a PFL W-2. TT/Calif will then subtract that federal wage amount from your Calif income but you can enter a different amount if only some of it is qualified PFL from the VPDI provider.

Be sure you have corrected the wages in TT/Calif when you are shown that PFL screen and change the total federal wage amount (it defaults to all of the federal wages are PFL) and enter the PFL portion yourself - that's apparently W-2 Box 1 minus Box 16 in your case. You should see the PFL income subtraction on Schedule CA, line 7, column B.

[clk87]

What if Boxes 1 and 16 are the same (on my W-2)? And what if Box 16 is more than Box 1 (on my wife's W-2)? How can I determine the PFL amount to enter into TurboTax when it asks for "PFL income received from insurance company"?

[TerryA]

If the W-2 doesn't indicate that then you should ask the employer to clarify. For California taxes this is a big deal.

[Alshan]

In W2 from employer Wages in Box 1 include PFL (paternity family leave) amount but are not included in Box 16 California state taxable wages.

Amount on W-2 box 16 have no affect on CA tax amount!

According to CA form 540 State wages calculated based on Box 1 minus adjustments.

Should I enter PFL amount calculated as amount in Box 1 minus amount in Box 16 in the TurboTax Form "Paid Family leave (PFL) income in California" to get PFL adjustments?

If I enter 0 there is NO adjustment

[BillM223]

@Alshan

As TerryA noted above, the box 16 amount on your W-2 for state wages is not used anywhere on your California return; instead, the state return starts with your federal numbers and then adds and subtracts items that are taxed differently from the federal return.

If the employer included any "real" PFL payments in your federal income, then it would be included in box 1 on the W-2 because it is taxable on the federal return.

I say "real" because PFL is normally paid in California in one of two ways: on a 1099-G from the CA EDD, or on a W-2 from your employer's insurance company.

It is not normal for your employer to pay you PFL as part of your salary. Only if the employer included money from their voluntary plan (VPDI) would it be PFL that is excludable from state income tax.

It seems that employers talk about "PFL" when in fact it doesn't meet the definition of PFL under state law, which causes a great deal of confusion for California taxpayers.

So don't "calculate" the PFL amount; instead, directly ask your employer who paid the PFL that appears in box 1 on your regular W-2 (i.e., not a W-2 from the insurance company, if you received one). Get it in writing, because the State of California is very aggressive about auditing taxpayers who claim PFL on their state return.

Enter on that PFL screen in the California interview ONLY the amount of PFL that appeared in Box 1 that was paid from the employer's VPDI insurance. Otherwise, enter zero. Don't just hit and continue.