ESD paid sick leave tax reporting confusion - no 1099 received

I had the exact same situation last year! After spending hours on the phone with both ESD and the IRS, I ended up NOT reporting it as income. The IRS agent I spoke with said that if no 1099 was issued, and the paying agency (ESD) doesn't consider it taxable, then there's no requirement to report it. I was worried about it too, but my return was accepted without any issues.

This is actually a common misunderstanding. Washington PFML sick leave and regular PFML are different programs with different tax treatments. PFML (family leave) benefits are taxable at the federal level and require a 1099-G, while Washington Paid Sick Leave benefits are NOT considered taxable income by the IRS (as of 2025 tax year). That's why you didn't receive a 1099 for the sick leave portion. If you received both types, you'll only get a 1099-G for the family leave portion. You can verify this on the ESD website under the tax information section.

I'VE BEEN THROUGH THIS EXACT NIGHTMARE!!! ESD is HORRIBLE about explaining this stuff! I got sick leave for 8 weeks in 2024 and spent DAYS trying to figure this out. Finally found out that WA sick leave benefits are NOT federally taxable - it's considered a "qualified disaster relief payment" under some obscure tax code (Section 139 I think). Different from regular PFML which IS taxable. The ESD agents themselves often don't understand the difference which is why they give such terrible advice!!!!

Tax professional here. This is a confusing area even for tax experts because states handle paid leave programs differently. For Washington specifically, you're correct that ESD doesn't issue 1099-G forms for Paid Sick Leave (as opposed to Family Leave). The IRS generally considers state disability payments non-taxable if the premiums were paid with after-tax dollars, which is the case for WA Paid Sick Leave. You don't need to report this income. However, any Family Leave payments ARE taxable and should come with a 1099-G. Keep documentation of your payments in case of questions, but you're fine excluding the sick leave portion from your return.

Has anyone tried getting through to ESD directly about this? I've been calling for three days trying to get clarification on my own sick leave payments from December but can't get past the automated system. Every time I select the option to speak with an agent, it just tells me call volume is too high and disconnects me! So frustrating when you need actual help with something important like taxes!

BTW - make sure you're talking about actual Paid Sick Leave and not Short-Term Disability through an employer plan which is COMPLETELY different for tax purposes! Some people mix these up! Short-term disability payments ARE usually taxable if your employer paid the premiums! If you paid the premiums yourself with after-tax money, then the benefits aren't taxable! It gets so complicated!!

I just left my sick leave payment off my taxes completely. if the IRS wants it they can come get it lol. seriously though, if ESD doesn't issue a tax form and they're the ones who told you it's not taxable, i think you're fine. the IRS has bigger fish to fry than chasing people for taxes on state sick leave benefits that might not even be taxable in the first place.

For anyone still confused: 1. Washington PFML has TWO components: Medical Leave (sick leave) and Family Leave 2. Family Leave = taxable federally (you'll get a 1099-G) 3. Medical Leave (sick leave) = NOT taxable federally (no 1099-G issued) 4. If you received both types, you'll only get a 1099-G for the Family Leave portion 5. Keep your payment statements from ESD showing which type you received There's also a detailed explanation in ESD's FAQ section that covers this exact question.