A Touch of Grey in the Silver Lining: Taxing Family Leave

The federal tax treatment of paid family and medical leave is surprisingly complicated. To put it bluntly, if your analysis seems simple, your conclusion is probably wrong.

At the outset, some historical perspective may be helpful. Since 1994, the federal Family and Medical Leave Act (FMLA) has provided job security to employees who miss work for their own medical needs or those of a family member. The FMLA, however, does not require that an employee be paid during this protected leave of absence.

In 2002, California added to its state unemployment program a paid family leave benefit that ...