Paid Family Leave Taxation Guidance Released

On August 25, 2017 the New York State Department of Taxation and Finance (DFS) released highly anticipated guidance regarding taxation of PFL benefits and premium in Notice N-17-12. Here are the key points:

• Benefits:
  • 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
  • Benefits should be reported by the State Insurance Fund on Form 1099-G and by all other payers on Form 1099-MISC
     
• Premiums:
  • The premiums will be post-tax, i.e., deducted from an employee’s after-tax wages
  • Employers should report employee contributions on Form W-2 (Box 14: State disability insurance taxes withheld)