Taxable Gross Components on Nontaxable Deductions
We are seeing some unusual taxation on the new WA Paid Leave tax in Tax Update 19-C, and it makes us question if we understand the use of the Taxable Gross Component IDs and have potentially setup up deductions incorrectly.
We have a mandatory 401(a) retirement plan with an Employee deduction and an Employer match, and we've attached the delivered Component IDs 401K and 401R, respectively. The retirement account is a 401(a) account, not a 401(k), but we attached it to this deduction because it is still a pre-tax retirement account, the thinking being that all pre-tax retirement accounts would be treated by the states similarly.