Calif Family Leave payments



Deductibility was questioned in some earlier posts.
This is from Spidell:

Feds are taxing Paid Family Leave benefits, state is not
Paid Family Leave (PFL) benefits are a substitute for
taxable wages and are “in the nature of unemployment
compensation†under IRC §85. This makes them taxable for
federal purposes, according to a nonbinding opinion the IRS
released to the EDD. In the same opinion, the IRS stated
that PFL benefits are not considered “wages†for FICA
purposes and are not subject to FICA. For state purposes,
unemployment compensation is specifically exempt from tax
under R&TC §17083 and is not subject to employment taxes.
So, for state purposes, PFL benefits are not taxable.

The EDD will follow the nonbinding opinion and will reflect
the taxability of benefits on the 2004 Forms 1099-G, Certain
Government Payments. PFL benefits can be up to $4,368 for
2004, so be sure that your client is not underpaid for
federal purposes


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