Can Turbo Tax Correctly Process Paid Family Leave Income on My 2025 Return?

The confusion around Paid Family Leave (PFL) in tax software is pretty common! In most states with PFL programs, these benefits are considered taxable income at the federal level, but the taxation at the state level varies depending on where you live. When you receive PFL benefits, you should typically get a 1099-G form from your state showing the total benefits paid to you. This form might not arrive until late January or early February, so check your mail or your state's PFL portal if you haven't received it yet. Turbo Tax is asking those questions because this income needs to be reported separately from your W-2 wages. The important thing to remember is that PFL payments aren't reported on your W-2 since they don't come directly from your employer - they come from the state fund that you and your employer have been contributing to. You'll need to enter the information from your 1099-G when prompted by TurboTax.

I had a similar headache with Paid Family Leave last year and discovered that taxr.ai was incredibly helpful for sorting this out. I was stuck in TurboTax too, unsure if I was entering everything correctly, especially since I had both regular income and the PFL payments. I uploaded my W-2 and 1099-G to https://taxr.ai and it automatically identified that I needed to report the PFL income separately from my regular wages. It even pointed out that my state (California) doesn't tax the PFL benefits at the state level, which saved me some money! The step-by-step guidance walked me through exactly which boxes in TurboTax needed what information. Really took the stress out of wondering if I was doing it right, especially since it was my first time dealing with family leave payments on my taxes.

I was skeptical about using yet another tax tool as mentioned above, but I finally gave taxr.ai a try out of frustration with my complicated PFL situation. I'm honestly impressed with how it handled my specific case. My situation was messy because I had received family leave payments from two different states (moved mid-year) and TurboTax kept giving me circular questions. The tool immediately identified both 1099-Gs and explained exactly how each state handled the taxation differently. It even pointed out that I was missing potential deductions related to my move that could offset some of the PFL tax burden. The documentation analysis was way more thorough than I expected. Saved me from what would have probably been an audit trigger with my unusual situation. Definitely recommending it to my sister who's about to go on maternity leave.

If you're still struggling to get answers about your Paid Family Leave tax questions, I went through this exact nightmare last year trying to reach my state tax department. Called for weeks and couldn't get through to a real person who could help me understand if I was filing correctly. I eventually used https://claimyr.com to get through to an actual human at my state tax office. They basically hold your place in the phone queue and call you when they get a representative. I was skeptical, but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c The tax department confirmed that my PFL benefits needed to be reported on a specific line in my state return that wasn't obvious in TurboTax. The agent walked me through exactly where to put the information. Without that call, I would have definitely filed incorrectly.

I need to eat my words about the Claimyr service from my skeptical comment above. After being on hold with my state's tax office for a cumulative 4+ hours over 3 days, I broke down and tried it. Got connected to a tax specialist in about 45 minutes without having to do anything. The rep confirmed that my Paid Family Leave benefits needed to be reported differently depending on which county I lived in (apparently my state has some weird local tax rules). She even gave me a direct extension to call back if I had follow-up questions. For something as specific as Paid Family Leave taxation, which seems to have different rules everywhere, getting definitive answers from an actual government employee was invaluable. I would have absolutely filed incorrectly based on my interpretation of the TurboTax prompts alone.

One thing no one mentioned yet - check if you had any additional withholding on your PFL payments! In my state you can elect to have taxes withheld when you apply for benefits. If you did that, there should be a section on your 1099-G showing federal (and possibly state) taxes already withheld. I made the mistake of re-entering these withholdings in TurboTax when it asked about "other withholdings" and essentially double-counted them. Ended up having to file an amended return. The software isn't always intuitive about this.

Don't make the mistake I made last year... if your employer "topped up" your PFL benefits to match your full salary, that supplemental pay DOES appear on your W-2! But the base PFL benefits from the state are on the 1099-G. I spent hours trying to reconcile why my total income in TurboTax was higher than I expected until I realized I was counting some income twice. My employer's payroll department explained that the extra money they paid to "make me whole" during leave was included in Box 1 of my W-2, while the state benefits were separate.

This thread has been incredibly helpful! I'm dealing with a PFL situation myself and had no idea about some of these nuances. One question I haven't seen addressed - what happens if you received PFL benefits in December but didn't actually take the leave until January of the following tax year? My daughter was born in late December, but I didn't start my actual leave until after the New Year due to how my company handles their leave policies. I received a lump sum payment in December for the upcoming leave period. Should this be reported on my 2024 return even though the leave itself was in 2025? I'm worried about getting this timing wrong since it seems like there are so many ways to mess up PFL reporting. Also, has anyone dealt with PFL from multiple states? We moved mid-year and I'm not sure if I need to file anything special since I was paying into one state's program for part of the year but used a different state's program for the actual leave.

I went through this exact same confusion with TurboTax and PFL benefits! You're right to be careful about getting it correct - the reporting requirements can be tricky. First, check your mail and online portals for a 1099-G form from your state's family leave program. This form should show the total PFL benefits you received and any taxes that were withheld. The 1099-G is separate from your W-2 because the payments come from the state fund, not directly from your employer. When you enter the 1099-G information in TurboTax, make sure you're putting it in the "Government Payments" or "1099-G" section, not trying to add it to your W-2 wages. TurboTax will walk you through this when you get to that section. One important thing to double-check: if your employer provided any "top-up" payments to supplement the state benefits (bringing you closer to your full salary), those employer contributions WOULD appear on your W-2. But the base PFL payments from the state should only be on the 1099-G. If you haven't received your 1099-G yet, contact your state's PFL department - they usually have online portals where you can access or request these documents. Don't file without it, as you'll likely need to amend your return later if you miss reporting this income.