Reporting of Third-Party Medical Leave Payments

Some employers, such as those in Colorado subject to FAMLI rules, may directly receive notices when an employee receives pay for medical leave through a state paid leave plan. As these payments may need to be included in an employee’s gross income and may also be considered to be taxable wages, it is important that Adams Keegan clients provide these notices to their assigned Payroll Account Manager so we can ensure the wages are reported correctly for employment tax purposes. 

You can read more about IRS Revenue Ruling 2025-4 - which provides guidance on the taxation and reporting requirements of state PFML statutes - by clicking here, courtesy of Ogletree Deakins.