Taxes on Maternity Leave Benefits

by Annie on April 15, 2012 · 0 comments

in Maternity Leave

I finally finished my taxes over the weekend. Are you curious whether I had to pay taxes on my maternity leave benefits from 2011?

No Tax on State Disability Insurance (SDI)

Like unemployment, neither the federal government nor the state government taxes your SDI payments when you are on maternity leave. Your taxes are withheld on your pay stub for the any sick leave or vacation you used during this time to integrate with SDI to get your full paycheck.

Please read this post if you do not understand the breakdown of how sick leave, vacation, SDI, and PFL all add up to your paid maternity leave.

Since you are “working” less than 40 hours while on SDI, you do not have to pay the Social Security tax. So you might notice a slight pay increase in your take home pay while on maternity leave if you have full income replacement from integrating your earned sick leave and your maternity leave benefits from the state.

Tax on Paid Family Leave (PFL)

However, if you chose to take Paid Family Leave (ok, raise your hands if you decide not to take PFL), you will pay taxes to the federal government. Your taxes are not automatically withheld like your pay check. For the state, you only need to report it on the tax forms, but you will not be tax on PFL.

You will receive a Form 1099G for the payments from PFL. I recorded the payments from PFL on Line 19 of Form 1040 for my federal income taxes.

Paid Family Leave is taken into account in the form where I made the California Adjustments for my state income taxes. The adjusted amount is transferred into Line 14 of Form 540.

So don’t live it up on your maternity leave payments and remember to save some money to pay your taxes for PFL the following year!

To find out about how to make the most of your maternity leave and enjoy the time with your baby, you need to watch this. I watched this video in my birthing class and it made a huge difference on how to get our baby adjusted to being outside the womb and to stop crying. His method really works!

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