Do I check the box "i earned all or part of this income as paid family leave"?

[darren-lau]

I went on paternity leave and utilized Paid Family Leave through the state of CA.  I received a 1099G from CA for my PFL payments.  In addition, while I was out on paternity leave, my employer supplemented my PFL payments by paying me through my accumulated sick and vacation days.  My question is, after entering my W-2 from my employer, I should NOT check the box "Paid Family Leave - I earned all of part of this income as paid family leave" correct?  The income I was receiving while I was on paternity leave through my employer was coming out of my sick and vacation time so I believe that is not considered paid family leave payment.  Only the income that I received from EDD is considered paid family leave payments correct?

[PhyllisG · Accepted solution]

You are correct.  Paid Family Leave (PFL) is either administered by a governmental agency or a private insurer.

When the PFL is paid by the state of California, then the amount is reported by the Employment Development Department (EDD) on a Form 1099-G, which will make it a non-taxable event for the state. In other words, the PFL is not reportable or taxable to the Franchise Tax Board.

When the PFL is paid my an insurer, then the PFL is reported on the Form W-2 as income.  You will then check that it is a PFL W-2. The reason is to ensure that the appropriate adjustment is made to exclude the amount as income on the California return.

Vacation and sick leave are considered fringe benefits an employer may choose to offer; therefore, the benefits are not considered PFL.

[myles1]

Hello!

When you say "When the PFL is paid my an insurer, then the PFL is reported on the Form W-2 as income.  You will then check that it is a PFL W-2. " do you mean that you will get a separate W2?"  I received PFL income from an insurer in a manner in which you describe, but not a second W2. It's mixed together with the non-PFL income. My concern is Turbotax only has a box to check to denote "all or part" of the income was PFL- no space to enter the partial amount of PFL

[titagaby]

Same question for me, I got paid PFL via a 3rd party insurance  but I don't know if I should check the box or not since there is no option to put the partial amount.  If I check the box, all California state tax withheld is returned to me so I'm not sure how to correct that

[ReneeM7122]

Yes, you should check the box. The state tax withheld is returned to you because in California, it is not a taxable event.  See the answer from Phyllis above. 

Paid family leave is entered as follows:

1. Open or continue your tax return.
2. Search for 1099-G and select the Jump to link at the top of the search results.
3. On the Did you receive unemployment or paid family leave benefits in 2020? screen, answer Yes.
4. Follow the onscreen instructions to enter your 1099-G information.

Here is a TurboTax article about Paid Family Leave.

@titagaby

[myles1]

The problem is TurboTax then refunds ALL taxes paid to CA on ALL wages. That can't be correct.

[GotTaxQs45]

@myles1 

I had a similar issue.  I think that's a flaw or lack of clarity in TurboTax - after inputting your W2 in the federal section it asks you to check the box about "Paid family leave - I earned all or part of this..."  It looks like if you check this box it will record all of your wages on that W2 as CA exempt for the time being when estimating your CA Refund.  When you get to the state section it will ask again how much of the wages were PFL and it will show that the entire amount is pre-filled in that field.  You'll update that amount in that field to be the actual amount of PFL (see below, it appears this amount is likely to be zero).

Here is a helpful article I found with more info about where CA PFL is coming from (1099-G or a W2) and which portions will actually be CA exempt.  From what I understand, it seems to indicate that PFL paid via your employer is probably not CA exempt.  It appears that only PFL that's reported on a separate W2 from a third party insurer or is reported on a 1099-G is exempt.

https://ttlc.intuit.com/community/tax-topics/help/what-do-i-need-to-know-about-paid-family-leave-pfl...

I'm not a tax expert, but the above article helped clear it up for me - hopefully it's helpful for any others on this thread looking for help.

[nrenshaw]

Yes you are partially correct. If you are paid PFL ( Paid Family Leave) from an insurance company your employer should report it on the same W-2 in box 14 and should show VPDI and an amount that amount is not taxable in California or if it is report on your w-2

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 enter the amount (if any) that was paid by an insurance company, and not your employer.

If none of the amount was paid by an insurance company, and all of it was paid by your employer, you must enter $0 in the wages box 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.