I have a 1099-MISC for paid family leave where do i ADD THIS ON MY TAX RETURN?

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January 29, 2021
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TurboTax Deluxe Online

DawnC

Employee

You should have a Form 1099-G, not a 1099-MISC for your Paid Family Leave. Paid Family Leave (PFL) income is money you receive from your employer, an insurer, or the government while you are away from work for an extended period of time so you can recover from a serious health issue, take care of a seriously ill family member, or bond with your newborn or newly adopted child.

In the United States, employers who offer PFL are the exception rather than the rule. PFL is usually only available through larger employers, if it is offered at all. A small but growing number of states have enacted PFL legislation. They include California, Connecticut, the District of Columbia, Massachusetts, New Jersey, New York, Rhode Island, Oregon, and Washington. The National Partnership for Women Families keeps a list of state PFL laws.

Paid Family Leave is different than paid time off like sick pay. For example, a new mother working at a company that does not offer PFL, might still take maternity leave based on accrued sick days. This pay falls under paid time off, and it is taxed differently than pay from PFL.

Unemployment compensation and paid family leave are entered in the same place:

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

If you have a 1099-MISC instead of a 1099-G, the income may not be paid family leave and should be reported elsewhere. Typically, companies that offer paid medical leave or disability do so through a third-party insurer. You may receive a separate W-2 from that insurer to report the PFL income or you may see the PFL reported as third-party sick pay on your regular, company-issued W-2.

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karenrr

I have the same issue. I also received a W2, but that was for a claim entirely paid within 2022. The payment on the 1099-MISC was for 2022 payments on a claim opened in 2021. I know where to enter the W2, but entering the 1099 drops me from a $200 return to a $400 payment (approximately). What am I doing wrong? Should I enter this as a 1099-G? It was paid by a third party insurer, but is MA PFMLA.

JamesG1

Report this as 1099 income that is not self-employment income.

Follow the steps below to report income on an IRS Form 1099-MISC.

Select Federal from the left side menu.
Click on Wages & Income.
Scroll down to Other Common Income. Click Show more.
Click Start / Revisit to the right of 1099-MISC.
Enter 'paid family leave' under Describe the reason.
Select 'None of these apply' at the screen Does one of these uncommon situations apply?
Select 'No' at the screen Did the income involve work.
Select 'No' at the screen Did the income involve an intent to earn money?

The entry will be reported:

on line 8z of Schedule 1 of the Federal 1040 tax return, and
on line 8 of the Federal 1040 tax return.

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

@karenrr

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John B72

It appears there is no correct answer to this issue except to 1) Submit a Schedule C or 2) Enter the 1099-MISC as if it were a 1099-G.
This is not good Turbotax!!!

MonikaK1

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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