What counts as paid family leave in California?

[jselzler]

Hello,  I am trying to determine if the pay my wife received after having a baby is taxable by the state of California.  I know that paid family leave is not taxable, but I am not sure if what she got counts as paid family leave.  Talking to her HR she was on "medical leave" and was paid for her sick days.  When she used up her sick days she then was paid 50% of her salary for the rest of six weeks "per Ed code" (She is a teacher).  Then she went on unpaid FMLA.  Is it all taxable?  Are the sick days taxable but not the days at 50% pay?  This happened in 2011, but the tax board sent me a notice stating I owned back taxes for subtracting out of state wages on my tax return.  Where they got that idea from I have no idea.  Turbotax subtracted them since I thought they were paid family leave. Perhaps I should have paid taxes on them however since I am I not clear if they count as paid family leave or not.

[TerryA]

When PFL comes from the Calif EDD, it is reported on a 1099-G which you enter in the federal return. TT/Calif then knows it is PFL and subtracts it out of income for you - no further entries need be made for that.

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.

PFL paid by the employer is not excludable - it must be paid from the Calif SDI program or the employer's VPDI to be excluded from Calif income. I haven't seen one but I would hope that payments from a  VPDI would be clearly noted on the W-2. If you don't see anything like that then the FTB isn't going to see it either and would deny the PFL income exclusion.