Paid Family Leave - Short term and Long term disability

[earthshine]

Last year I received fully paid medical leave while on short term disability (family medical leave of absence for 12 weeks). Then our disability insurance company paid 60% for some time, and then began paying 50% of my pay at the end of the year.

I received two W2s. One from my work, which includes when I was working from Jan to June as well as my FMLA paid leave from June to Sept. The other W2 is from my disability insurance company for 60 and 50% from Oct-Dec.

Would I mark Paid Family Leave for one or both of these in Turbo Tax? What implication does it have on my owed taxes? I live in Michigan. Thank you

[MaryK4]

Michigan does not have a Paid Family Leave.  Paid Family Leave (PFL) is an employee-funded state insurance program that provides wage replacement (a percentage of one's income) to eligible workers when they take time off of work to care for a seriously ill family member or to bond with a new child.  State with Paid Family Leave: California, Massachusetts, New Jersey, New York, Rhode Island, Washington, the District of Columbia, and Connecticut.  

For income tax purposes, all PFL is taxable on the federal tax return, but some states have exclusions for the state income tax.

[earthshine]

Mary,

Are you saying that "Michigan does not have PFL" means Michigan has no exclusion for income tax? So it will not impact the result whether I mark that box as yes or no? Also, I don't recall receiving a 1099-G. Is that because I live in Michigan? Only those who live in the states listed will receive a 1099-G? I want to ensure I didn't miss it in the mail. Thanks.

[MaryK4 · Accepted solution]

Yes, that is correct- marking Paid Family Leave will remove it from income if you are filing in a state that allows an exclusion.  TurboTax would not exclude it for Michigan (because there is no place to do so on the Michigan return) so in your case (and most cases)- even if it is checked in error, it will not affect your state tax return.  You would not have received a 1099-G unless you worked in one of the PFL states.  Also, just for your reference, to show how complicated this issue is. even in states like California that has a state program that would report it on the 1099-G, employers have the option of a "voluntary" plan which uses a private insurance company and reports on a W2.  @earthshine