Are Workers Comp Payments Taxable

[Troy]

Does the government tax workers comp payments? I'm ready to file my taxes however I havent recieved any kind of 1099 form from workers comp. Is this taxable income?

[Greg]

Nope. File away.

[Wink]

Scroll, click on Workers Compensation.


http://www.irs.gov/publications/p525/ar02.html

[Unregistered]

There are two types of payments, temporary disability benefits and permanent disability benefits. Temp is paid at 70% of gross for a reason - it already considers the average, overall tax deduction. Perm is not taxable since it represents a loss of function and loss of earning potential. They cannot tax you on your LOSS of earning potential.

[imahurt]

There are two types of payments, temporary disability benefits and permanent disability benefits. Temp is paid at 70% of gross for a reason - it already considers the average, overall tax deduction. Perm is not taxable since it represents a loss of function and loss of earning potential. They cannot tax you on your LOSS of earning potential.

can the IRS attach or put a lien on a settlement if you owe back taxes?

[BvIA]

There may be different rules regarding attachment of WC benefits/awards...in Calif, the only lien to a WC settlement is for back due child support, and that is taken by the state.

On the other hand, the IRS does pretty much what they please...including an attachment on your SSA/SSDI benefits if necessary.

States though don't report to the IRS on WC claims...so what IRS doesn't know about, they can't attach.

[RanoneLaw]

Not sure what state you are in, but in Rhode Island, weeky compensation benefits are not taxable, neither are lump sum settlements. www.ranonelaw.com

[Q-man]

Not sure what state you are in, but in Rhode Island, weeky compensation benefits are not taxable, neither are lump sum settlements. www.ranonelaw.com

Ditto for NYS.

[Xfylur]

I'm in a union and the contract provides for disability insurance. My employer holds back the WC pay as an offset and I get taxed on the full disability pay. So, I actually do get taxed on WC even though I get the checks directly from the IC. The full amount (gross plus WC) showed up in Box 1 of my W2.

I looked at the IRS rules and it appears that they can do this when they pay you separate disability pay.

Anyone know something different?

[princessLA]

I WOULD NOT Suggest TAKING ADVICE FROM AN INTERNET BOARD ON THIS PARTICULAR issue. I am a licensed tax preparer, and I won't answer this, Sorry.

Don't mess with the IRS!!!

Do you have an IRS Office in your town? I suggest you go there, and seek their assistnce.


Best Wishes,
LA