7 Days Success - Find Leading IT Consulting Company
  • 7 Days Success
  • Business
  • Education
  • Health
  • Sports
  • Tech
  • Travel
  • Send Us Email
Close
7 Days Success - Find Leading IT Consulting Company
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

Business

Is It Protected to Purchase Tik Tok Preferences?

October 19, 2021 Tyler Felix
Once in the course of our life, we more likely than not utilized Tik Tok or if nothing else caught wind of it. Indeed, Tik Tok is only a stage...
Finding The Best Supplier For Continuous Inkjet Printer Ink
Share:
Business

Finding The Best Supplier For Continuous Inkjet Printer Ink

August 8, 2022 Tyler Felix
When your business uses a lot of printer ink, you will want to ensure you use a quality supplier for all your ink requirements. When looking...

Business

  • How to measure the success of your fleet vehicle signage campaign
    April 23, 2023
    How to measure the success of your fleet vehicle signage campaign
    Business
  • Working with an agency for lead generation in Singapore: Top tips!
    March 25, 2020
    Working with an agency for lead generation in Singapore: Top tips!
    Business

Recent Posts

  • ERP Implementation: Key Considerations for SMEs
  • Smart Financial Tips to Buy Your First Bike
  • Proximity to Paradise: The Benefits of Staying Near the Shoreline
  • The Evolution of Sports Betting: Past- Present and Future
  • Decoding the Secrets of NSE Option Chain: Unleash Your Profit Potential
  • What You Must Consider When Buying A Laser Engraving Machine
  • Family Dentist In Denver: What Do They Do?
  • 6 great reasons to go whale watching when visiting Sydney
Close

Archives

  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • 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
    84 Posts
  • How Paid Family Leave Complicates Taxes for Employers
    education
    23 Posts
  • How Paid Family Leave Complicates Taxes for Employers
    featured
    4 Posts

Prime Men’s Medical Center in Jacksonville

Travel

  • How to Keep College Campuses Safe from Crime
    Travel
    How to Keep College Campuses Safe from Crime
    May 6, 2023
  • Best Things to Do In Khajuraho in 2022
    Travel
    Best Things to Do In Khajuraho in 2022
    August 19, 2022
  • 5 Things to Do in and Around North Goa’s Candolim Beach        
    Travel
    5 Things to Do in and Around North Goa’s Candolim Beach        
    September 24, 2021
Do not miss
ERP Implementation: Key Considerations for SMEs
ERP Implementation: Key Considerations for SMEs
September 28, 2023
Smart Financial Tips to Buy Your First Bike
Smart Financial Tips to Buy Your First Bike
September 26, 2023
Proximity to Paradise: The Benefits of Staying Near the Shoreline
Proximity to Paradise: The Benefits of Staying Near the Shoreline
September 20, 2023
The Evolution of Sports Betting: Past- Present and Future
The Evolution of Sports Betting: Past- Present and Future
September 18, 2023
Decoding the Secrets of NSE Option Chain: Unleash Your Profit Potential
Decoding the Secrets of NSE Option Chain: Unleash Your Profit Potential
September 15, 2023
What You Must Consider When Buying A Laser Engraving Machine
What You Must Consider When Buying A Laser Engraving Machine
September 11, 2023
Family Dentist In Denver: What Do They Do?
August 31, 2023
6 great reasons to go whale watching when visiting Sydney
6 great reasons to go whale watching when visiting Sydney
August 31, 2023
The Impacts of Having a Pizza Restaurant
The Impacts of Having a Pizza Restaurant
August 22, 2023
Elevate Your Play: A Comprehensive Overview of Purchasing Golf Clubs
Elevate Your Play: A Comprehensive Overview of Purchasing Golf Clubs
August 18, 2023

© 2022 – 7 Days Success. All Rights Reserved.