Tax treatment of PFML contributions
The tax treatment of PFML contributions for both state and federal purposes is governed by federal tax law. The Commonwealth has requested guidance from the Internal Revenue Service (IRS) on this question and others related to the tax implications of PFML contributions and benefits.
Until IRS guidance is issued, individuals and businesses are urged to consult with their own tax advisors on these questions.
Based on its own review of federal rules and following consultation with the Massachusetts Department of Revenue, the Department of Family and Medical Leave anticipates that the IRS will conclude that employee contributions should be withheld from after-tax wages.
A definitive rule for proper tax treatment of contributions will be available once IRS guidance is issued.
Common examples of wages that are subject to PFML contributions
Generally, the following are considered wages:
- Salaries, hourly pay, non-cash tips, and stipends
- Commissions and bonuses
- Overtime, vacation, or sick pay
- 401K employer contributions
For a full definition of wages, please refer to section 1 of M.G.L. c. 151A.
The following is a list of the categories of income reported on a 1099-MISC that is or may be subject to contributions:
- Other income (Box 3): Depending on the nature of the payment, this category may be subject to contributions
- Fishing boat proceeds (Box 5)
- Medical and healthcare payments (Box 6)
- Nonemployee compensation (Box 7)
- Crop insurance proceeds (Box 10)
- Excess golden parachute payments (Box 13)
DFML hours of operation: 9 a.m.-5 p.m., DOR hours of operation: 8:30 a.m.-4:30 p.m.