If you are currently receiving workers’ compensation payments, you may be wondering whether they get reported on your tax return – and if so, how they are calculated.
Thankfully, workers’ compensation payments are fully tax-exempt under federal law, and this is related to the determination of the amounts paid to you. Perhaps you are wondering why only two-thirds of your average weekly wage is paid to you for workers’ comp. Since no taxes are taken from these benefits, it is as if you are receiving after-tax dollars approximating what you would normally receive when working.
If you are simultaneously receiving Social Security benefits along with your workers’ compensation benefits, that can complicate the situation, so it may require a closer look from our Social Security department or from a tax professional. Contact us if this situation applies to you. Watch the video to learn more.
If you have additional questions about workers’ compensation benefits and your injury case, I want you to call me at (888) 487-8546. I welcome your call. Visit our educational website at www.kalfusnachman.com/videos for more videos and media content from our law firm.
Are you presently receiving workers' compensation payments? Are you concerned about your tax liability for such payments? Hi, my name is Brian Slaughter. I'm the senior worker's compensation attorney at Kalfus and Nachman. I'm frequently asked by my clients whether they have to pay taxes on the compensation payments they're receiving under workers' compensation. They want to know if they report it with their tax return, and if so, how are those taxes calculated?
Well, I'm happy to report that workers' compensation payments are fully tax-exempt under federal law. And so, some people wonder why it is that you only receive two thirds of your pre-injury average weekly wage as a compensation benefit. Well, this is one of the reasons. No taxes are taken out of your compensation benefit, and it's like you're getting after-tax dollars. As with everything, there are a few situations involving simultaneous payment of workers' compensation and social security benefits that might require a closer look by our social-security department here at Kalfus and Nachman or by a tax professional.
So why am I telling you this? Workers' compensation is a very detail- oriented, complex area of the law, and you may have questions that need answering. I answer questions about workers' comp all the time, and I'd be happy to answer any questions you might have. So pick up the phone, call me, Brian Slaughter, the senior workers' compensation lawyer at Kalfus and Nachman, and I'll answer any questions you might have. Thank you for watching.