Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.
02-25-2017 02:59 PM - edited 02-25-2017 03:04 PM
My wife had a baby in 2016. My employer allowed me to take 8 weeks of bonding leave, which was paid to me by a different 3rd party company called Reed Group. Reed Group gave me two payments each week, one for "paid bonding" (top-up) and one for "paid family leave". I got two W-2s from Reed Group this year.
The first W-2 from Reed Group has $XXXX in in box #1 (wages). Boxes #3 and #5 (ss wages, medicare wages) match the amount in box #1 (as expected.) This W-2 is representative of the "top-up" money that was paid to me, which I understand to be fully taxable on both the federal and state levels (I am in California.) By top-up, I mean that the amount of "paid family leave" plus the top-up would equal my current salary. I think it's obvious to me to include this W-2 when I file my taxes.
The second W-2 from Reed Group has box #1 (wages) and #2 (federal tax withheld) blank. But boxes #3 and #5 both (ss wages, medicare wages) contain the same amount $YYYY. Boxes #4 and #6 also contain amounts showing the SS taxes and Medicare taxes were withheld. I think it is correct to say that it is like this because paid family leave can be excluded from federal taxable wages (but apparently not SS and Medicare taxes)
I should also note that both W-2s from reed group have $0 withheld for both federal and state taxes.
Can I safely not include the second W-2 when filing my taxes? If I try to include it, I get a message saying that it is not possible for me to e-file since one of my W-2s has a $0/blank amount I really don't want to paper file due to the amount of increased time it takes (for me to prepare at my end, and also to receive my refund.)
Finally, since the $YYYY amount mentioned above was not reported on the federal basis as a wage, am I correct to say that I do not include $YYYY on my California Schedule CA 540 section A line A "Received Paid Family Leave benefits on Form W-2"? Adding it in there increases my state refund, but there is a line on the form that says "NOTE: Enter amounts only if included in your Federal AGI" (which I don't think applies in my case.)
02-25-2017 09:54 PM
Welcome to the H&R Block community.
Third party sick pay and items paid as third party sick pay are not taxable at the the federal level for the federal income tax. You do not need to include the W-2 that shows no wages on your tax return. You only need to enter the first W-2 that has the wage amount in Box 1 and your withholdings in Box 2.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)
02-25-2017 10:56 PM
thanks for explaining
Do you happen to know the answer to my other question in filing for California, regarding:
since the $YYYY amount mentioned above was not reported on the federal basis as a wage, am I correct to say that I do not include $YYYY on my California Schedule CA 540 section A line A "Received Paid Family Leave benefits on Form W-2"? Adding it in there increases my state refund, but there is a line on the form that says "NOTE: Enter amounts only if included in your Federal AGI" (which I don't think applies in my case.)