How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lev Your Own Question

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22350
Experience:  Taxes, Immigration, Labor Relations
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

Just got a letter from the California franchise tax board stating

Resolved Question:

Just got a letter from the California franchise tax board stating that I own an additional $3K for tax year 2009. I went back and reviewed my return and the revision they are making to my taxable income has to do with a deduction around "paid family leave."

When I was completing my return using turbo tax, it asked if any of my income had been earned during a paid family leave -- I had been on maternity leave that year, and so I entered the appropriate amount and it deducted it. Now that I am reading the line item on the actual return, it says, "paid family leave insurance benefits," which is slightly different from how it was asked on turbo tax (i believe).

Can you please explain the rules around the deduction? Trying to understand if my maternity leave would be captured under this deduction.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
Unfortunately - benefits received under the new California Paid Family Leave insurance program are taxable for federal income tax purposes, but should not be taxable for CA state income tax purposes.
The EDD should report these benefits on 1099G form.
Please see for reference - http://www.arlengroup.com/facts/fact_fmla.pdf
See also explanation on the EDD site - http://www.edd.ca.gov/disability/FAQ_PFL_Benefits.htm#TaxPurposes
How are Paid Family Leave insurance benefit payments treated for tax purposes?


For state tax purposes, Paid Family Leave benefit payments are not taxable by California pursuant to Revenue and Taxation Code section 17083.
I might suggest to contact CA FTB and provide that information. It seems as they made a mistake.

LEV :

I also found direct reference from CA FTB - https://www.ftb.ca.gov/aboutFTB/press/archive/2004/04_79.shtml


State Controller and Franchise Tax Board (FTB) Chair Steve Westly announced that benefits paid to employees participating in the Paid Family Leave program are not subject to California income tax.


"I'm delighted to tell Californians they can take time to be with their newborn children or care for their loved ones without worrying about getting stuck with a state tax bill," said Westly.


The new law (SB 1661 Kuehl, Ch. 2002) extends disability compensation to people who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a new baby or adopted child. Because the benefits paid are in the nature of unemployment compensation, California law considers it nontaxable income for state purposes. Anyone eligible starting July 1, 2004, can claim weekly benefits of up to $728 for a maximum of six weeks.

Customer:

Thank you for finding that information. That was helpful. there is one thing that I found unclear in the link. The earnings that are not taxable have to come from the state or are leave benefits paid by employers also eligible. Does the reference to "voluntary plan" in this sentence, " An estimated 13 million California workers covered by SDI or a similar Voluntary Plan are eligible for this benefit," imply that benefits paid by my employer also get the same benefit? I deducted much more that $728 per week for 6 weeks. it is unclear if that is referencing how much you can collect from SDI or that is how much you can deduct. Any thoughts on this?

LEV :

Above are for California Paid Family Leave insurance program paid out from SDI coverage.
If you have separate insurance program - benefits are taxable or not based on who paid premiums.
You must include as taxable income any amount you receive through an insurance plan that is paid for by your employer. If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income.
Thus - if you pay the entire cost of that insurance plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return.
However - if premiums are paid by your employer - all benefits are taxable.

Customer:

Thanks again for the information. I want to be sure I am understanding this correctly...

Customer:

if I received payment from the state it is not taxable.

Customer:

If I received payment from an insurance company where I paid the premiums, then it is not

Customer:

If I received payment from my employer directly, then it is taxable.

Customer:

Doesn't that go against the spirit of the letter provided in the link?

Customer:

which is you shouldn't have to pay taxes while you are on leave?

Customer:

sorry, you clearly can't opine on their intention of the law

Customer:

honestly, not sure who paid me...

Customer:

why does it coming from insurance or not affect it?

LEV :

Your understanding is correct.
The letter above is related to the California Paid Family Leave insurance program paid by EDD - these are payments made by the state.
It is not about any insurance payments.
In you situation - you need to be clear - who made these payments.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22350
Experience: Taxes, Immigration, Labor Relations
Lev and 8 other Tax Specialists are ready to help you
Expert:  Lev replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    566
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    566
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3046
    10+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3103
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    CPA, CMA, CFE

    Satisfied Customers:

    3257
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2679
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2219
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.