When you get your workers’ compensation benefits immediately following an injury, it can be quite a relief. You know you will at least have some money to meet the needs of you and your family. But if you receive benefits for very long, you may start to wonder if those benefits are taxable. Will taxes get taken out before the benefits are given to you, or worse, will you find out at the end of the year that you owe a bunch of taxes on the benefits you received? Fortunately, in most cases, taxes are one thing you do not have to worry about when it comes to workers’ compensation.
There is one exception to this rule, however. If you are in a situation where you are getting both workers’ compensation benefits and Social Security Disability benefits, you may wind up paying some taxes.
The Rule – Workers’ Compensation Payments Are Not Taxable
In IRS Publication 907, the IRS says that specific payments are not taxable, including “Workers’ compensation for an occupational sickness or injury if paid under a workers’ compensation act or similar law.” This means that you can expect your workers’ compensation payments to come to you in full, and that you do not have to worry about any tax obligations for those payments when tax time arrives.
The Exception – Social Security Disability And Workers’ Compensation
If you are in a situation where you are receiving both Social Security Disability and workers’ compensation, you may find that your Social Security Disability benefits are reduced by a certain amount, based on your workers’ compensation benefits. There are limits on the total amount of benefits you can receive from the two different sources – 80% of your earnings prior to your disability. When your total benefits go above the 80% mark, then Social Security Disability will begin to reduce to accommodate the limitation.
This is when the exception to the rule arrives. Social Security Disability is always taxed, so you might expect taxes to come out of the Social Security Disability payment you receive. What you might not expect is that the amount your are taxed on will still be the full amount – what Social Security Disability would have paid you if you were not receiving workers’ compensation benefits.
Getting The Money You Need To Get By
It can be difficult to get by on the amount of money you get from workers’ compensation, even when disability is included – especially when the tax rules do not always work in your favor. For many people, it is all they can do to make ends meet when they can no longer work. Financial difficulties are one of the main reasons that injured workers wind up seeking the services of a workers’ comp lawyer. You need to know your options, and you need to know the best way to make the law work for you.
Talking to an experienced Albany workers’ compensation attorney can make a big difference in the outcome of your benefits and your overall financial situation. Depending on the nature of your accident and injury, you may have the option of pursuing legal action in a personal injury case against the part that is responsible. You may also have the option of pursuing a third-party claim, where you go after the manufacturer of defective equipment or a sub-contractor that contributed to your injury.
Beyond the options for pursuing a personal injury case, your attorney can also help you understand the complicated terrain of the workers’ compensation and Social Security Disability process. Knowing the right way to do things throughout the application and appeals process can make a big difference in the final outcome you get.
Ultimately, you need money to get by after an injury. Working with an experienced lawyer in the Albany area will ensure that all possibilities are available to you.
Contact My Albany Area Workers’ Compensation Law Firm
I have helped numerous clients to navigate the complicated world of workers’ compensation and Social Security Disability. If you have been hurt on the job, I would be glad to talk to you about your situation and give you some targeted legal advice. I offer a free initial consultation, so talking to me will cost you nothing. Please contact me now to get started.