With tax season just around the corner, you may be wondering “Is workers’ comp taxable?” Well, you can breathe easy. In general, workers’ compensation is not taxable but your reward may be reduced in certain situations. A workers’ comp attorney can maximize your claim reward and help you understand what’s rightfully yours. Keep reading to learn more.
Workers’ Comp Benefits
Workers’ compensation is a vital part of keeping American workers safe and healthy at their jobs. It’s a form of insurance that almost every employer has to carry to ensure that when someone gets hurt at work, their medical needs are covered. Under workers’ comp, if you get hurt on the job, your medical bills will be covered and you can recoup a portion of your weekly wages to help you make ends meet while you recover.
However, workers’ comp does not blanket cover any and every injury that occurs on a job site, but only injuries that were caused due to performing your normal work duties. If you get in a car accident en route to a client’s location, slip and fall on the way to the bathroom, get hurt lifting a box of copy paper, or even have a heart attack due to strenuous work, you will likely be covered.
If you get hurt due to getting assaulted on your lunch break, on the other hand, you may not be covered by worker’s comp, as fighting isn’t considered a normal part of your work duties. However, in this case, a personal injury claim could result.
Is Workers’ Comp Taxable?
In general, benefits from workers’ compensation are tax-free meaning they’re not not subject to withholdings. However, if you are receiving both workers’ comp and Social Security disability insurance (SSDI) benefits for disability, you may end up having to pay some taxes. In most cases, workers’ comp reduces the amount of SSDI you can receive if the combined award is greater than 80% of the average current earnings before you got hurt.
If your SSDI benefits are offset, the amount by which SSDI is lowered is taxable. For example, let’s say you are getting $1,125 in SSDI, as well as $575 in worker’s compensation. If your average current earnings were over $2,125 per month, your SSDI is offset by worker’s comp. The amount by which it is reduced is subject to tax.
Social Security and Tax
However, Social Security isn’t always taxable. It’s only taxable if your annual income is more than $25,000 as a single person or $32,000 for a married couple. Otherwise, even your social security isn’t taxed. Even still, if your yearly income is between $25,000 and $34,000 as an individual or between $32,000 and $44,000 as a married couple, you only pay taxes on 50%. Anything about that, the most you will be taxed is up to 85%.
Workers’ Comp Attorney
Issues surrounding workers’ compensation can be extremely complex. Some people are even unfairly denied claims when they first apply for benefits. When you’re facing difficulties of any kind with your compensation claim, you need qualified legal help from a Workers’ Comp attorney to be sure you get the full benefits to which you’re entitled and that you’re able to continue to make ends meet.
For years, the attorneys at Disparti Law Group have helped people just like you pursue the benefits and settlements they deserve. Give us a call today for a FREE case review at (312) 600-6000 and find out why thousands say… Larry wins!
