Michigan Worker's Compensation - Help For Injured Michigan Workers

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  1. #1
    Join Date
    Jun 2007
    Posts
    38

    Default Income Tax and Worker's Comp Settlements

    Hello everyone, does anyone know if you pay income tax on your settlement? My husband was wondering about that and how its handle when tax season comes around. thanks if anyone has an answer to this question.

  2. #2
    Join Date
    Feb 2007
    Location
    Calif
    Posts
    18,045

    Default Re: ? About Income Tax and Settlement

    Workers compensation benefits/settlement money is not taxable at the state or federal level.

    You don't pay taxes you don't receive a W-2 or 1099 statement of income on.
    If you look at the 1099 or long form for reporting federal taxes...there is no line for 'workers compensation', and in the instruction booklet...there is a line telling you that WC is not to be included...

  3. #3
    Join Date
    Oct 2006
    Posts
    9,109

    Default Re: ? About Income Tax and Settlement

    workers compensation payments are not considered earned income by the IRS.

  4. #4
    Join Date
    Jun 2007
    Posts
    38

    Default Re: ? About Income Tax and Settlement

    Thank you for the info. You guys are just the greatest

  5. #5
    Join Date
    Oct 2006
    Posts
    9,109

    Default Re: ? About Income Tax and Settlement


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