New York State Paid Family Leave Taxation Update

New York has released Notice N-17-12 which provides guidance regarding taxation of the Paid Family Leave Program beginning January 1, 2018.

  • Benefits will be taxable non-wage income and must be included in federal gross income.
  • Employees must request voluntary tax withholding as the taxes will not automatically be withheld.
  • Employers should deduct premiums from employees’ after-tax wages.
  • Employers should report employee contributions on Form W-2, Box 14.
  • Benefits should be reported on Form 1099-G by the State Insurance Fund and on Form 1099-MISC by all other carriers.

The guidance for New York Paid Family Leave benefits is limited to Notice N-17-12.  It is recommended that employers seek further guidance from a tax or employment counselor.  Employee contributions may begin as early as July 1, 2017.  Employers will want to reach out to their NY DBL/PFL carrier to determine the contribution schedule that best fits their PFL policy.

Beginning January 1, 2018, New York employees may take job-protected, paid leave to bond with a new child, care for a seriously ill family member, or to take leave for a qualifying military exigency. New York Paid Family Leave will be phased in over four years beginning with 8 weeks of paid leave in 2018.
Please see our July newsletter for additional information regarding New York Paid Family Leave.

The Larkin Company is here to help.  Please contact us and we will schedule a time to review your plans and policies.