7 Days Success -  Get tips on life's health and wellness
  • 7 Days Success
  • Business
  • Education
  • Health
  • Sports
  • Tech
  • Travel
  • Send Us Email
Close
7 Days Success -  Get tips on life's health and wellness
Close
  • 7 Days Success
  • Business
  • Education
  • Health
  • Sports
  • Tech
  • Travel
  • Send Us Email
How Paid Family Leave Complicates Taxes for Employers
Share:
Business July 12, 2019 Tyler Felix

How Paid Family Leave Complicates Taxes for Employers

There are now six states that, along with the District of Columbia, mandate paid family leave (PFL) benefits to qualifying employees. These six states and the District have created systems whereby both employers and employees pay into PFL programs for the purposes of providing continuity of pay when an employee has to take time away from work to attend to family matters.

PFL seems simple enough in principle. But in reality, it is anything but. A PFL benefit creates additional tax burdens for employers already struggling with payroll taxes, withholding, and compliance. It would not be a surprise to see new PFL mandates in other states drive more companies toward abandoning in-house payroll in favor of outsourcing.

Taxes on PFL Contributions

Each of the six states offering mandated PFL require employees to contribute to their state programs. The District of Columbia does not. Employees in the six states contribute to PFL in a way that is similar to their contributions to state unemployment insurance. The big difference is in how taxes are applied.

Contributions to PFL programs are post-tax contributions. In other words, employers withhold federal and state income taxes, FICA, and unemployment taxes first. Then they deduct contributions for a variety of additional benefits, including PFL. That means the money being contributed to the PFL program is taxed as well.

Taxes on PFL Benefits

All of the jurisdictions mandating PFL, with the exception of Rhode Island, pay out benefits from government coffers. When the employee begins to receive benefit payments, those payments come directly from government in much the same way as unemployment and welfare payments. As such, no withholding is required from the employer.

As to whether or not those benefits are taxable, the answer is both ‘yes’ and ‘no’. Neither FICA nor federal unemployment taxes are levied on PFL. Federal and state income taxes are. This creates a curious situation that amounts to double taxation. The employee’s portion contributed to state programs is taxed at the time the employee is paid. Received benefits are also taxed at the time of receipt.

For the record, states may withhold income taxes on request. Otherwise, beneficiaries pay the taxes when filing their annual returns.

Employer-Sponsored PFL

PFL can be especially challenging when employers decide to offer the benefit voluntarily, explains Dallas-based BenefitMall. The problem here is that the IRS has not made any definitive rulings about whether PFL benefits are subject to tax. BenefitMall agrees with other experts who urge employers to take a conservative approach.

Assume voluntary PFL is just like health insurance, 401(k), and other benefits. Report benefits in the same way. Handle withholding the same way as well. Plan on PFL benefits being subject to federal and state income taxes, FICA, and unemployment taxes.

Maintaining Compliance

At the core of this entire discussion is the idea of compliance. Whether your company offers PFL as a matter of legal requirement or on a voluntary basis, it’s important that all withholding and tax issues be addressed the right way. Compliance is not an option.

BenefitMall says that any trouble maintaining compliance is a good indication a company needs the assistance of a third-party payroll provider. Maintaining compliance is one of the benefits of outsourcing payroll.

Companies that choose to continue doing payroll in-house should at least be working with experienced attorneys or accountants who understand compliance issues relating to PFL. Also be aware that growing numbers of states are looking at implementing PFL mandates as well. What affects only six states and the District of Columbia right now could eventually spread all across the country.

Previous post Would You Go ‘Under the Needle’ to Treat Hair Loss?
Would You Go ‘Under the Needle’ to Treat Hair Loss?
Next post Auto Insurance Comparisons – Method Of Getting Massive Savings
Auto Insurance Comparisons – Method Of Getting Massive Savings

Related Posts

Upgrade Your Current Gloucester Office Or Move To A New One?
Share:
Business

Upgrade Your Current Gloucester Office Or Move To A New One?

January 24, 2022 Tyler Felix
There can come a time when your business outgrows your office, and you need to consider what to d to find the space you need. Sometimes, you have...
What To Look For When Choosing A New Van For Your Business
Share:
Business

What To Look For When Choosing A New Van For Your Business

October 1, 2022 Tyler Felix
When you are looking to update the vehicle for your business, you must consider many factors that can help ensure you make the correct choice. It...

Business

  • What To Look For When Choosing A New Van For Your Business
    October 1, 2022
    What To Look For When Choosing A New Van For Your Business
    Business
  • Top 3 websites for you to Buy Likes for Instagram
    September 21, 2021
    Top 3 websites for you to Buy Likes for Instagram
    Business

Recent Posts

  • Add A Rider To An Existing Life Insurance Policy
  • 3 Kidney Stone Home Remedies That Actually Work
  • The Impact of Artificial Intelligence on Futures Trading
  • Tips For Choosing The Right Design Courses As Per Your Needs
  • The Ultimate Guide to Understanding What Cold Calling Is
  • The Future of Cannabis: How HHC Could Revolutionize the Industry
  • Sports Picks for Beginners – How to Get Started with Betting on Sports?
  • Whatever You Ought To Know About Psilocybin Mushrooms
Close

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • December 2020
  • November 2020
  • September 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018

Categories

  • How Paid Family Leave Complicates Taxes for Employers
    automotive
    3 Posts
  • How Paid Family Leave Complicates Taxes for Employers
    business
    74 Posts
  • How Paid Family Leave Complicates Taxes for Employers
    education
    21 Posts
  • How Paid Family Leave Complicates Taxes for Employers
    featured
    4 Posts

Prime Men’s Medical Center in Jacksonville

Travel

  • The most effective method to Choose the Best Travel Destination For You
    Travel
    The most effective method to Choose the Best Travel Destination For You
    April 13, 2019
  • Best Things to Do In Khajuraho in 2022
    Travel
    Best Things to Do In Khajuraho in 2022
    August 19, 2022
  • What to Know Before Going Swimming with Seals
    Travel
    What to Know Before Going Swimming with Seals
    August 15, 2021
Do not miss
Add A Rider To An Existing Life Insurance Policy
Add A Rider To An Existing Life Insurance Policy
March 27, 2023
3 Kidney Stone Home Remedies That Actually Work
March 22, 2023
The Impact of Artificial Intelligence on Futures Trading
The Impact of Artificial Intelligence on Futures Trading
March 21, 2023
Tips For Choosing The Right Design Courses As Per Your Needs
Tips For Choosing The Right Design Courses As Per Your Needs
March 17, 2023
The Ultimate Guide to Understanding What Cold Calling Is
The Ultimate Guide to Understanding What Cold Calling Is
March 14, 2023
The Future of Cannabis: How HHC Could Revolutionize the Industry
The Future of Cannabis: How HHC Could Revolutionize the Industry
March 14, 2023
Sports Picks for Beginners – How to Get Started with Betting on Sports?
Sports Picks for Beginners – How to Get Started with Betting on Sports?
March 5, 2023
Whatever You Ought To Know About Psilocybin Mushrooms
Whatever You Ought To Know About Psilocybin Mushrooms
March 4, 2023
Can I Buy Travel Insurance After The Departure From India?
Can I Buy Travel Insurance After The Departure From India?
March 1, 2023
What benefits are included with medical travel insurance?
What benefits are included with medical travel insurance?
March 1, 2023

© 2022 – 7 Days Success. All Rights Reserved.