New York Paid Family Leave (PFL) is a new benefit program that offers paid leave to New York employees while they bond with a new child, care for a close relative with a serious health condition, or when an employee’s family member is called to active military service. PFL will phase in over a period of 4 years and it takes effect on January 1, 2018. For more information on New York Paid Family Leave, please see our previous New York Paid Family Leave Update.
The New York State Department of Taxation and Finance recently released tax guidance relating to New York Paid Family Leave benefits, as these benefits will have tax implications for New York employees, employers, and insurance carriers.
Action Item:
Employers and their payroll staff should be aware of the following New York tax 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.
Please note: it is the responsibility of each employee and employer/insurance carrier to consult with its tax advisor regarding all potential tax issues.
Helpful Links:
New York State Department of Taxation and Finance Notice
New York Paid Family Leave Update
New York Paid Family Leave Website
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