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How to handle Colorado FAMLI benefits paid by third-party administrator?

CForestK

My employer, based in CO, uses Mutual of Omaha to facilitate our FAMLI benefits instead of the state-administered plan. MoO sent me a 1099-Misc instead of a 1099-G that the state would send for FAMLI benefits paid out. So, I entered the income in the federal return appropriately as a 1099-MISC.

However, when I get to the CO state return subtractions area, it asks if I have FAMLI benefits to subtract (since my understanding is that they aren't taxed at the state level). But the info for this question says: "Subtract only the amount of FAMLI benefits, if any, included on line 7 of Schedule 1 (IRS form 1040, 1040-SR, and 1040-NR). For example, if you reduced the amount reported on line 7 for contributions, you may only subtract the reduced amount."

I'm hesitant to enter my FAMLI benefits income here since it isn't listed on line 7 of my 1040 because it wasn't entered as a 1099-G. I'm curious what the correct way to handle this might be. Googling and looking in this forum brings up similar questions but not many answers.

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Accepted answers

JohnV

The CO FAMLI benefits is taxable for federal income tax, but not state income tax. CO will issue to all claimants of the FAMLI benefits on Form 1099-G, box 1, unemployment compensation, which flows to the federal Schedule 1, Line 7 as you have referenced below.

This does not mean you cannot deduct it from state tax even if you receive Form 1099-MISC, and not the Form 1099-G, just because they go into a different line of the federal tax return. You can see in this CO tax return instruction booklet, under 2025 DR 0104AD – Subtractions from Income Schedule, Line 19 said to deduct FAMLI benefits received and included in federal taxable income. You are referencing a different line in another section when you mentioned "federal form 1040, Schedule 1, line 7."

This is not needed, Line 19 of the 2025 DR 0104AD – Subtractions from Income Schedule allows this deduction no matter where it is on the federal tax return.

Colorado 2025 Tax Instructions Booklet 104

https://tax.colorado.gov/sites/tax/files/documents/Book104_2025.pdf

All comments

JohnV

This is not needed, Line 19 of the 2025 DR 0104AD – Subtractions from Income Schedule allows this deduction no matter where it is on the federal tax return.

Colorado 2025 Tax Instructions Booklet 104

https://tax.colorado.gov/sites/tax/files/documents/Book104_2025.pdf

TJTax

https://community.freetaxusa.com/discussion/comment/6557#Comment_6557

I'm in the same boat, but I was issued a W-2 instead. On the W2, box 12a includes an amount that is "excluded from wages" (12a (J)), and 14(a) includes an amount that is "included in wages" (which is the same amount in box 1 of the W2). There is a second 14(b) box that includes an amount for "total benefits paid", which is the total of 12a(j) and 14(a). What amount should I subtract from my CO income? Thank you.

MatthewD

Hi TJTax,

Only subtract the FAMLI amount that was included in wages and reported on the federal form 1040. Contact Customer Support so they can review your account and review any entries.