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Thread: WC Tax

  1. #1
    Join Date
    Oct 2010
    Posts
    6

    Default WC Tax

    From what I gather and have read WC payments are tax free. If this is the case , how would this situation work.

    I was injured on the job and was out for about 13 weeks. The entire time I was paid by my employer, as we have unlimited paid sick leave. My WC checks from the WC insurance was sent directly to my employer and I assume they cashed them or what ever they do.

    If WC is tax free , my paychecks were taxed as normal. Would I actually be entitled to that money back? Meaning a refund of the tax paid on the "other " half of my paychecks?

  2. #2
    Join Date
    May 2010
    Posts
    312

    Default Re: WC Tax

    Quote Quoting Medic View Post
    From what I gather and have read WC payments are tax free. If this is the case , how would this situation work.

    I was injured on the job and was out for about 13 weeks. The entire time I was paid by my employer, as we have unlimited paid sick leave. My WC checks from the WC insurance was sent directly to my employer and I assume they cashed them or what ever they do.

    If WC is tax free , my paychecks were taxed as normal. Would I actually be entitled to that money back? Meaning a refund of the tax paid on the "other " half of my paychecks?
    I sure dont have a straight answer.....but if you were on workmans comp. you would only be getting 66% of you weekly check....In the long run if you have good deductions you may be ahead of the game....Talk to your tax guy he'll have the answer!

  3. #3
    Join Date
    Feb 2007
    Location
    Calif
    Posts
    18,045

    Default Re: WC Tax

    If WC is tax free , my paychecks were taxed as normal. Would I actually be entitled to that money back? Meaning a refund of the tax paid on the "other " half of my paychecks?
    No. You are paid wage continuation by your employer, OR wage loss benefits, TTD, by the WC carrier. Wages are taxed state/federal, disability benefits are not taxed.

    You were paid ''wages" by your employer as unlimited sick leave. You were not paid 'disability' benefits.

  4. #4
    Join Date
    Oct 2010
    Posts
    6

    Default Re: WC Tax

    Quote Quoting BvIA View Post
    No. You are paid wage continuation by your employer, OR wage loss benefits, TTD, by the WC carrier. Wages are taxed state/federal, disability benefits are not taxed.

    You were paid ''wages" by your employer as unlimited sick leave. You were not paid 'disability' benefits.
    If that is the case , then what were the checks for that I had to sign over to the company from WC ?

  5. #5
    Join Date
    Jan 2010
    Location
    Pennsylvania
    Posts
    609

    Default Re: WC Tax

    How many checks did you sign over? And why didn't you ask then?? Doesn't sound kosher to me

  6. #6
    Join Date
    Oct 2010
    Posts
    6

    Default Re: WC Tax

    I was out for about 8 pay periods, I did not ask then because I was unaware that WC was non taxable. I had no idea. I was fighting to get my surgery paid for etc etc. Plate was full at the time with that.

    This only came to light now because during a discussion I was having about some other issues about company contributions to my 401k. I was told the company will make good on the failed contributions. Was given this as an example.


    Two guys from another shop location were injured on the job. They were out for a few weeks. They received their full paychecks like normal. They got their WC checks and signed them over to the company since they were getting full pay from the compay. They found out that WC was also non taxed but their full paychecks were taxed. They brought it up to the company and the company said ooops, and gave them the amount they taxed on that 66%.


    I said to the union rep .... Well My checks were taxed also .... We agreed that we would look into this ...... If in fact that WC was non taxed , we would go back to the company and see what the deal was .



    What doesn't sound kosher?

  7. #7
    Join Date
    Feb 2007
    Location
    Calif
    Posts
    18,045

    Default Re: WC Tax

    If that is the case , then what were the checks for that I had to sign over to the company from WC ?
    The employer is the insured party. When they have a salary continuation plan, you continue to receive your regular wages...taxable. The benefits the carrier pays go back to the ER...you can't receive wages and disability benefits for the same period. Why would anyone "double dip" while being disabled due to work injury ?

    Whether or not the 66% wage replacement benefits are taxable or not remains to be seen. Never heard of that one...IRS will no doubt have something to say. Wages were paid, not disability benefits. Wages are taxable, disability isn'lt.
    They brought it up to the company and the company said ooops, and gave them the amount they taxed on that 66%.
    The others may find differently when they file their tax returns. The ER doesn't make the determination on what money is/isn't taxable. Just because another person experienced the payments as you suggest doesm't mean its right. Or wrong.

  8. #8
    Join Date
    Oct 2010
    Posts
    6

    Default Re: WC Tax

    Quote Quoting BvIA View Post
    The employer is the insured party. When they have a salary continuation plan, you continue to receive your regular wages...taxable. The benefits the carrier pays go back to the ER...you can't receive wages and disability benefits for the same period. Why would anyone "double dip" while being disabled due to work injury ?

    Whether or not the 66% wage replacement benefits are taxable or not remains to be seen. Never heard of that one...IRS will no doubt have something to say. Wages were paid, not disability benefits. Wages are taxable, disability isn'lt.

    The others may find differently when they file their tax returns. The ER doesn't make the determination on what money is/isn't taxable. Just because another person experienced the payments as you suggest doesm't mean its right. Or wrong.
    That was the reason for the post asking the question . Trying to see if it was something that needed to be looked into further or just not a can of worms worth opening.

  9. #9
    Join Date
    Feb 2007
    Location
    Calif
    Posts
    18,045

    Default Re: WC Tax

    The sick leave is FULLY TAXABLE... that is not 'disability' benefits, you weren't paid by the WC carrier.
    IF your ER is legally self insured, then the wage loss/TTD would be paid according to the WC rules for disability benefits.
    You were paid either wage continuation, or sick leave... both of which would be taxable.

    You can tell what is taxable/non taxable by comparing your wage/payroll check stub, and W-2's.
    You do not receive either showing deductions on any WC benefits checks.

  10. #10
    Join Date
    Oct 2010
    Posts
    6

    Default Re: WC Tax

    I DID receive WC check payable to ME, but I had to sign them over to the company. When I asked Chubb ( the WC carrier) why I was getting these checks, they stated that it is a part of the claim , but since I was getting sick leave from the company , I sign them back over to the company. So even though the company was paying my salary up front , they were only "making up the difference" to what WC was NOT paying me .... that other 34% ...

    Work paid me 100 % up front

    WC paid me 66% of salary but signed checks over to company ( reimbursing company of their up front payment)

    Company only REALLY paid me 34% out of payroll

    If company received re-reimbursement for the 66% they paid me,

    I got taxed on the full 100% NOT just the 34%



    That is where the hang up here is.

    My pay stubs for that time frame only showed a line item of Sick hours out but everything else was broken down by gross pay , tax line items , then Net payout

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