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

CForestK
CForestK Member Posts: 1 Newcomer
in State Filing

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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  • JohnV
    JohnV FreeTaxUSA Agent Posts: 14 image
    edited February 4 Answer ✓

    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

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