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As employers navigate year-end payroll reporting, questions have emerged about how Colorado's Family and Medical Leave Insurance Program (FAMLI) premiums and benefit payments should appear on the Form W-2. Below is a general overview of reporting guidance for employers that has been previously provided by the Colorado Department of Revenue and the FAMLI Division. This information does not constitute tax advice, and both employers and employees are encouraged to consult a qualified tax professional for further guidance. 

FAMLI Premiums  

Employers are advised by the Colorado Department of Revenue to report FAMLI premiums in Box 14 (Other Information) on covered employees’ Form W-2, using “FAMLI” as the label. 

FAMLI Premium Refunds 

FAMLI program guidance tells us, “Employers must use the funds to refund employees who contributed premiums in 2023, unless their approved private plan authorizes 2023 collection of premium contributions from employees.” However, neither the Department of Revenue nor FAMLI program administrators have provided guidance on whether or how to report such refunds on the Form W-2. Employers should work with their tax professional to determine the best approach. 

Reporting State FAMLI Benefit Payments on Form W-2 

Individuals receiving FAMLI benefits from the state program will be issued a 1099-G by the FAMLI program, and employers should not include these payments on the W-2. Program administrators note that the benefits are reported as “Unemployment Compensation,” in accordance with IRS instructions. It is the responsibility of each individual taxpayer to determine how to file their taxes, and employees who have received FAMLI benefits in 2024 should consult with a tax professional. 

Reporting Private FAMLI Plan Benefit Payments on Form W-2 

For private FAMLI plans, the reporting depends on the plan's structure. The plan carrier will typically provide payment amounts for each employee and guidance on how payments should be reported on the W-2. Employers should confirm with their carrier to ensure accurate reporting. 

Tax Treatment of Benefit Payments 

The FAMLI statute clearly exempts FAMLI benefits from Colorado state income tax. There is no formal guidance from the Internal Revenue Service (IRS) that clarifies the federal tax treatment of any state mandated leave or disability benefit payment. Currently available guidance suggests that the FAMLI program benefits will be treated similarly to unemployment benefits, which are subject to federal income tax.  

Beginning in 2025, the FAMLI Division is launching an option for those receiving FAMLI benefits to have federal income tax withheld from their benefit payments. New claims filed on or after January 2, 2025, will be prompted to opt in or out of the withholding option. 

Given the nuances of W-2 reporting and state-specific programs like Colorado FAMLI, employers should consult a qualified tax advisor or reach out to the FAMLI Division directly for clarification. While this overview provides general guidance, tax professionals can offer tailored advice for individual circumstances. Additionally, employers are discouraged from providing individualized tax filing advice to employees. Instead, direct employees to the FAMLI Division or private plan carrier as appropriate to receive guidance. 

Employers Council members that want more information on FAMLI in general can access this whitepaper or email us at info@employerscouncil.org. 

 Hannah Rich is a human resources consultant for Employers Council.