View all Articles

New York State Issues Tax Guidance on Paid Family Leave Program

The New York Department of Taxation and Finance has released tax guidance regarding the state Paid Family Leave (PFL) program.

PFL Tax Guidance

The PFL guidance concerns the appropriate tax treatment of family leave contributions and benefits for New York employees, employers, insurers (including self-insured employers), and employer plans, among other entities. According to the 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.

Note: The state has emphasized that while the guidance may be helpful for PFL implementation, it is still the responsibility of each employee and employer/insurer to consult with its tax advisor.

Click here to read the guidance.

Background

The New York PFL law will be phased in beginning January 1, 2018, and will apply to employers of all sizes. When the law is fully phased in over the next several years, employees may be eligible for 12 weeks of paid, job-protected leave when certain life events occur.

Employers will be required to purchase a PFL insurance policy or self-insure. The premium of the policy will be paid for by employees. No employer will be required to fund any portion of the family leave benefit. Employers will not have to pay an employee’s salary while the worker is on leave — the employee will receive the PFL benefit through the insurance policy.

HR Works, Inc.’s Benefits Administration Services division assists employers with the administration of PFL benefits. Contact us today at (585) 381-8340 or info@hrworks-inc.com for additional information. Our Virtual HR Helpline clients can call or email with questions. We are working with our legal team to release a PFL policy later this month and will provide updates to other impacted handbook policies in January with the 2018 legal updates.

© 2011-2017 HR 360 All Rights Reserved.

HR Works, Inc., headquartered at 200 WillowBrook Office Park in Fairport (Rochester), New York, with an office in East Syracuse, is a human resource management outsourcing and consulting firm serving clients throughout the United States. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.