1099-G Paid Family Medical Leave Benefits

[Paul-G-328]

I have a client that has a 1099-G for Paid Family Medical Leave Benefits for $10,540 from the state of Mass without any tax taken out. Is this a taxable item? And there is no 1099-G form that I can find that has FML Benefits listed in Box 1.

[jclark11 · Accepted solution]

They are taxable.

[Paul-G-328]

Couldnt find a 1099-G Form that has FML in Box 1 though

[Skylane]

In general, Employee PFL benefits are subject to federal income tax but not Social Security, Medicare , or FUTA 

[Just-Lisa-Now-]

Its the same as unemployment.

[qbteachmt]

"Couldnt find a 1099-G Form that has FML in Box 1 though"

Meaning, you can't find an example? Or you never saw one before now? It isn't clear what that means.

This is from the 1099-G instructions:

"Box 1. Unemployment Compensation

Enter payments of $10 or more in unemployment compensation, including Railroad Retirement Board payments for unemployment. If you make payments from a contributory program that has been deemed to be in the nature of unemployment compensation, such as California's Family Temporary Disability Insurance payments or governmental paid family leave program payments, file a separate Form 1099-G for payments from each contributory program. Enter the total amount before any income tax was withheld. If you withhold federal income tax at the request of the recipient, enter it in box 4; see the instructions below."

[Paul-G-328]

Thanks, after reading the 1099-G instructions, I see that I can use Box 1 for FML

Appreciate your help

[Carol-L]

From Mass.gov: "Taxability of PFML Benefits

The IRS has not yet made a ruling on whether your PFML benefits are considered “taxable income.” Massachusetts tax treatment will follow the guidance provided by the IRS."

Massachusetts is providing 1099-G with Box 1 showing "Paid Family Medical Leave Benefit", though the taxability is still in question.  There is some discussion about the portion paid by the employee should not be taxable.

In Pro Series Basic, the 1099-G form lists Unemployment for Box 1.  If Box 1 is reporting payments from  the California paid family leave program,  this amount can be reduced by the contributions made by the employee to the program.

I would hesitate, this year, to report any reduced number that would cause a question at the IRS.

On the Massachusetts return there is a place to report the Full 1099-G income and the Taxable 1099-G income.

It would seem that a final determination has not yet been made by the IRS.  I'm holding off on filing a couple of clients returns at this time.

[Paul-G-328]

Thank you for this post Carol. I am also holding 2 clients returns because I wasnt sure how this would be settled. On the Comm of Mass issued 1099-G in box 1 shows FML Benefit (both of my clients show over $10K om this line) But the Pro Series 1099-G only has box 1 for Unemployment Compensation.

[pwilson13]

MA did put out a webinar that you can find on the Tax Professionals Page.  Item #17 on the webinar did state that MA PMFL is taxable, and reportable on Schedule X line 5.  However, I agree that the IRS has not yet said if they will tax this income, and as far as I can tell the only way to put this income on Schedule X, is to put it on the Federal 1099-G.

[Paul-G-328]

Thanks for the info. I did download the updated Mass return today and there is a new line on Schedule X, Line #4 to indicate that the 1099-G income can be changed from Unemployment to PFML income for the state.

[Carol-L]

In the Federal 1099-G (Box 1 Unemployment) put the MA 1099-G Box 1 PFML amount.  I would add the supporting statement giving it's source as MA PFML. 

If you need to make an adjustment to the taxable amount:  if it ends up not being taxable for Federal or you want to subtract out the amount the employee paid in, an adjustment can be made on the Federal Schedule 1 Adjustments to Income, Line 24 Z other Adjustments with a notation referencing MA PFML.

I was not able to find the Webinar you referenced.  If you could send me a link, I'd like to take a look at it.  Seems difficult to get a firm answer.

I appreciate the input.  

Carol

[pwilson13]

2021 Filing Season Update Presentation (state.ma.us)

Try this link.  They certainly don't make it easy to find on their website!  I got it from a DOR News e-mail, it was labeled Filing Season Presentation.

[Carol-L]

Thank you the link worked fine.

Too bad they don't make the answer easier to locate.

[WMarsden]

I'd love to see this webinar, but I can't find it. Can you please give me a link?

(sorry, my google fu appears broken.) 😞

Oops, saw your reply after I wrote this, sorry to bother you again, I'm all set!

[Carol-L]

If you open the Webinar. Slide 17 refers to PFML.  Be sure to actually play that portion of the Webinar.  The slide shows where to enter it.  When you "Play"  the presenter states that it is taxable income.

No mention of subtracting the employee contributions.

[Paul-G-328]

Carol, are you still holding clients returns waiting for a ruling on taxable FML? I think it has been long enough for any action on this and Im ready to send mine.

[Carol-L]

My clients and I decided to go ahead and file with the PFML as taxable income for Fed and Mass.  Since California is so similar (and taxable) to Fed, I can't see why Mass PFML would not be taxable as well.

The Massachusetts DOR Webinar you referred me to certainly states it is taxable.

[LB56]

So from this discussion, the Box 1 PFML benefit goes in the Unemployment Compensation box on Form 1099-G in ProSeries? Is that correct

[pwilson13]

That is correct.  Then on the MA return, you will designate it as PFML

[LB56]

thanks, that's what I did.

[tkarris]

Do you know if this is considered unemployment for the advanced premium tax credit on form 8962?

[pwilson13]

Excellent question, judges?

I wouldn't think so because as a Medical and Family leave program, it can be used to care for a family member, not because you were unemployed.  

As relates to our earlier discussions on this subject, I just found this in the instructions for Schedule 1:

If you made contributions to a governmental unemployment compensation
program or to a governmental paid family leave program and you aren't itemizing deductions, reduce the amount you
report on line 7 by those contributions.
If you are itemizing deductions, see the
instructions on Form 1099-G

Sounds like we can use contributions to MAPMFL to reduce the amount income reported on the 1099G.

[tkarris]

Thanks. The problem I'm having is since 1099G box 1 is treated as unemployment, Pro Series is carrying that to 8962 and generating a huge advanced premium tax credit that they are not entitled to.  I cannot override the system. I'm thinking of putting this 1099G into a 1099MISC. 

Unless of course IRS makes this nontaxable, then there is no issue with too much of an APTC. 

[qbteachmt]

"reduce the amount you
report on line 7 by those contributions."

The issue for MA (and likely some other States) comes from who pays the Sick Leave premium ("contribution") because sometimes it is the employee (and pre-tax means you don't also get to deduct it from the payout), post-tax, employer, both.

"Massachusetts’s PFML law is funded through employer and employee contributions, and is different from the federal Family and Medical Leave Act, and from any benefits your employer might already offer."