Understanding NYPFL Category On Your W-2 Tax Form

NYPFL or New York Paid Family Leave has caused some confusion regarding tax for New Yorkers. Be that employees, employers, or insurance carriers, the NYPFL category raises some questions for many.

It was recently made part of the W-2 form in 2018, and the employer is required to fill it just as other boxes on the form.

However, some things are unclear to people, which I am discussing in detail here. After reading this article, none of you will face trouble in filling out the form.

So, if you want to know everything about the NYPFL category on your W-2 tax form, then stay with me till the end. 

NYPFL Category On Your W-2 Tax Form: Know The Details

NYPFL is not something new for the New Yorkers. It is the PFL tax paid by the residents of New Yorker only.

People often ask me, “I live in New Jersey, so do I have to pay the NYPFL tax?” No, you don’t. Only those who live in New York or work for the companies registered in New York are eligible to pay this tax. 

When you take part in the New York Paid Family Leave Program, you are eligible to get paid family leave but also have to pay tax on the benefits you receive during this period. In this, the employer fills the tax information on the premiums of the paid family leave.

But where?

When it comes to putting the information, NYPFL information is added by using the “Other Deductible State Or Local tax” on box 14 of the W-2 form. That’s its category.

But wait. There is More to it and now I am explaining this.

Below are the key points that you should know about the New York Paid Family Leave.

Reports In Box 14 On W-2 Form

People generally don’t know where to fill in the additional information about the tax in the W-2 form. It’s Box 14.

All the information the employer has to put about NYPFL is reported in this box.

In Box 14, employers report any other tax information there is to know. The employer can also provide brief information about the tax in this section of the form.

Box 14 has the following details.

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Pension Contributions

Box 14 starts with the pension contributions.

Regulations about Pension are listed in the Internal Revenue section code 414. Federal tax is not applied to the pension contributions shown in this category.

However, FICA (social security and medicare) tax, state, and local tax are still subject to this contribution.

Pre-Tax Benefits

This part deals with the account programs and is under the Internal Code Revenue Section 125.  

These programs include:

  • Health Insurance
  • Care Assistance programs
  • Health Care Flexible Spending Program
  • These are subject to State and City taxes.

Commuter Benefits

The Pre-tax Commuter benefits are covered under Section 132 of the Internal Revenue Code section.

Domestic Partner’s Benefits

The last thing that is covered in box 14 is the domestic partner’s benefits.

You will see Other deductible state or local tax options there. Utilize it for NYPFL.

Now, onto other useful NYPFL details.

No Automatic Tax Withholding

Employers cannot withhold taxes automatically. You will have to make a request about it if you want the employer to do the withholding. 

The Paid Family Leave premiums extracted by the Insurance carriers are reportable on the W-2 form. But if the benefits are from a government agency, then you will have to report it on 1099G forms.

Added Under Federal Gross Income

According to NYPFL, any benefits that you get must be included in your federal gross income, and tax will be applied to it. Both federal and state taxes are subjected to these premiums.

The employer will deduct the premiums for NYPFL tax and then should include the employee’s contributions in the tax form.

Does Not Subject To FICA taxes

The paid family leave benefits are not subject to FICA taxes. This tax mainly deals with social security and Medicare and is usually lower than the federal and state tax. 

That’s about the NYPFL details. Now about the residents of other states.

NYPFL And the Residents of The Other States

Thousands of people are working for the New York employers but do not live in the state. They are the residents of other states, and the problem arises when the employer is filling their New York Paid Family Leave information on the tax form.

Let’s take the example of New Jersey.

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There are a lot of people from New Jersey that work in New York but have no idea what to do about the NYPFL. They pay the tax on their income in their own state and in New York too.

But if they are not specifically a resident of New York, paying the tax on the income that is particularly for the New Yorkers seems a little unjust.

But don’t worry; I am describing what you should do to get out of NYPFL if you are a resident of New Jersey.

 In New Jersey, you are supposed to pay tax on all of your income, regardless of where you earned it. New York, on the other hand, gives the leverage and imposes a tax on such income that is earned within the state.

To avoid getting double-taxed, you should file a New Jersey Resident return and a Non-resident return of the State of New York.

Due to this, New Jersey will give you the tax credit when you pay the tax to other jurisdictions. This credit also reduces the tax liability to make sure that you don’t pay tax twice on the same income earned.

But there’s a bit of a setback.

New Jersey won’t pay you the credit more than the state itself would have to get in the form of your tax than you paid in New York.

It means that if you paid 400$ in New York but the tax in New Jersey on the same income earned is 300$, you will get only the 300$ tax credit from the New Jersey state.

Similarly, if you live in any other state, you should file for the resident return in such a state as well to avoid double taxing.

Tip: To avoid any frustration and complication, first file the New York non-resident return, then file the resident return of your own state.

It would be best if you yourself communicate with your employer and request him/her not to deduct the New York State tax from your income. This will make everything easier for everyone.

Let’s now discuss the most asked queries and confusions of people about it.

I Have Not Taken NYPFL Leave. Do I Still Have to Pay Tax on it?

Yes, you still have to pay the premium annually even if you don’t take the Paid family leave.

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It is deducted from the payroll, and the department’s financial service sets the cost. It is around 0.511% of the total gross income.

Is Medical Leave Considered a Paid Family Leave?

Yes, if you are ill and the employer pays you for it, it is considered under PFL, or Paid Family leave.

For example:

You have chemotherapy, or you get leave due to pregnancy; it all counts in the Paid Family Leave. All the benefits you get during this duration will be subject to the federal and state tax applied.

Is Every PFL Premium Taxable Or Just The Amount That Exceeds Specific Contributions?

Yes, every Paid Family Leave benefit is taxable. There is no minimum limit to the PFL tax.

No matter what you get, you will have to pay the tax on it, and it is the duty of the employer to make sure that he fills all the relevant information about the income in box 14 of the W-2 form.

There is another entry right beside the NYPFL. It is NYSDI, and people are also confused about it. Is it related to the Paid family leave, or is it the whole other matter?

Well, it is not related to the PFL, but you should know about it too if you want to understand the NYPFL category on box 14 of the W-2 form completely. NYSE is the disability insurance and is not taxable. 

Do I Need To Enter NYPFL Information Every Time I Go On Vacation?

No, you don’t need to specifically report about the NYPFL if you go on vacation. It is already included in the wages, and it will already be there on your W-2 form. 

Concluding Thoughts

The NYPFL category on your W-2 Tax form is simpler than it looks. It is reportable in the Box 14 of the form where your employer put the additional tax information. All the premiums you get during this paid family leave are subjected to federal and law tax.

You can take Paid family leave for many reasons. Whether you have a medical emergency, you or your wife is pregnant, you have a child, etc., you can take paid family leave, But the benefits are taxable.