Income Tax & Withholdings

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To Get PFL Quote: Contact [email protected]

BENEFITS AND CONTRIBUTIONS

The New York State Department of Financial Services (DFS) and the New York State Workers’ Compensation Board (WCB) have advised insurance carriers they will not be answering questions related to taxability. Rather, the departments will follow the New York State Department of Taxation and Finance and the Internal Revenue Service’s (IRS) guidance on these questions. Some Insurance carriers are seeking further ruling and / or guidance from the IRS. 

The NYS DFS and WCB have shared some informal assumptions, subject to the review, confirmation and approval of the employer legal counsel, tax and financial advisor prior to advise to any employee

CONTRIBUTIONS PFL employee contributions are to be taken on a post-tax basis.This is likely based on the IRS ruling in relation to California’s family leave program that employee contributions are deductible as a state income tax. State income taxes are paid with post-tax dollars; therefore, the employee contributions are paid from post-tax dollars. Contributions would then be deductible for taxpayers who itemize.

TAXATION:

Federal Income Tax:

• The PFL benefits are treated similar to unemployment compensation, and may be subject to Federal income tax.  Ask your tax Advisor

State Income Tax: 

• The PFL benefits will be exempt and may not be, subject to New York State income taxation.

W2 Preparation: 

• The PFL benefits paid by an insurance carrier are reportable on W2s, or on 1099G forms, if PFL Benefits are paid by a government agency, such as the NY State Insurance Fund.

Social Security and Medicare (Employ-EE: FICA):

• The PFL benefits paid to an employee may not be subject to Social Security and Medicare (FICA) taxes.

Social Security and Medicare (Employ-ER: FICA):

• The employer would not pay a FICA match for any paid family leave benefits to employees.

Note:   The PFL benefits are in the nature of unemployment and disability benefit, and are not

          considered wages paid from an employer. Prior to advising employees ask your tax advisor.