CA Unemployment AND Paid Family Leave Exclusion

[Karl]

In California, EDD pays Paid Family Leave for new parents. It's taxable (only to IRS, not to CA FTB) & 1099-G's same as Unemployment Box 1.

I have a married couple client that had a baby late 2019.  In 2020, husband got UI $15K & PFL. W got PFL.

With today's update, Lacerte is excluding $10.2K of H's UI and all $3,577 of W's PFL. Any thoughts?

Is this acceptable (I don't think it's right, but I could be misinformed)?

If it's wrong, should I override to re-add the PFL back to Sch 1?

[TaxGuyBill · Accepted solution]

Yes, the taxable amount of the PFL is considered as Unemployment Compensation (Section 86 of the Federal Tax Code).

https://www.irs.gov/pub/irs-wd/0630017.pdf

[Karl]

Thank you!