New York State’s Department of Taxation and Finance released guidance regarding the tax implications of New York Paid Family Leave (PFL), the benefits of which take effect on January 1, 2018. As PFL premiums are funded through employee payroll deductions, the Department has reviewed the tax treatment of these contributions, along with reviewing the tax treatment of the PFL benefit itself.
The Department is providing the following guidance:
- Benefits paid to employees will be taxable non-wage income that must be included in federal gross income
- Taxes will not automatically be withheld from benefits; employees can request voluntary tax withholding
- Premiums will be deducted from employees’ after-tax wages
- Employers should report employee contributions on Form W-2 using Box 14 – State disability insurance taxes withheld
- Benefits should be reported by the State Insurance Fund on Form 1099-G and by all other payers on Form 1099-MISC
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