Is FMLA tax exempt in 2020 like Unemployment is? (insurance, deduction, taxable)

[slapshotbob99]

Hi,

I received paternity leave (FMLA) pay from New Jersey in 2020, so the state issued me a 1099-G. Turbotax seems to think this is tax exempt like unemployment since it's issued on the same form. Is this correct? I've been trying to search the internet but can't find an answer.

(I assume it's wrong and I should try to override Turbotax but I can't figure out how to do that.)

[Parnassia]

Originally Posted by slapshotbob99

Hi,

I received paternity leave (FMLA) pay from New Jersey in 2020, so the state issued me a 1099-G. Turbotax seems to think this is tax exempt like unemployment since it's issued on the same form. Is this correct? I've been trying to search the internet but can't find an answer.

(I assume it's wrong and I should try to override Turbotax but I can't figure out how to do that.)

Any help here? States treat paid family leave income differently. Does Turbotax software incorporate state-specific rules?

https://www.cpapracticeadvisor.com/p...-leave-taxable

[reed303]

Perhaps the answer is here https://www.nj.gov/labor/forms_pdfs/...9%20(1-18).pdf where on page 3 it says:

"Family Leave Insurance benefits are not subject to New Jersey state income tax"

[UntilTheNDofTimE]

Do you pay for it as a deduction line on your paycheck? I was always under the assumption that insurance policies you directly pay are tax exempt. Insurance policies paid by your employer are not.

For Instance unemployment insurance isnt paid by the employee thus it's taxable (in normal years)

In CA we have a disability insurance that's mandatory to pay (1% of wages). All disability payments are thus tax free.

When I worked for the government the above disability insurance didnt apply to managers because our employer provided their own version. Since it was an employer paid benefit when you used it,it was taxable.

[slapshotbob99]

I know that FMLA is always State exempt in NJ. I need to figure out if FMLA is exempt for FEDERAL purposes under the "American Rescue Plan" in 2020.

[Rabrrita]

First it is not FMLA it's FML. FLI is a federal act providing job protection during certain unpaid medical leave periods. FLI is NJ's version of state Family Leave Insurance payments.

In reading the American Rescue Plan, I can't find anything that exempts that payment from federal taxes. Since it sounds like you were approved based on paternity leave and not a medical disability, its technically not payment for the disability so those payments would be taxable. Additionally, payments made in 2020 wouldn't be covered anyways. You may need the help of a qualified tax professional to get the absolute correct answer.