No one wants to get hurt, but accidents are sometimes completely unavoidable. Imagine slipping on a wet floor while at work. You break your arm in the fall and have to go to the hospital. Fortunately, you can file a workers’ compensation claim to receive compensation for medical expenses and lost wages. While these benefits are generally not taxable, if you are already receiving Social Security Disability Insurance or Supplemental Security Income, they could be.
After suffering a work related injury, you should find out everything you can concerning workers’ compensation benefits. This includes your eligibility to file a claim, handling a possible denial, and any potential tax consequences. A personal injury attorney in the Burlington area can answer all of your workers’ compensation questions. Read further to find out more about the taxation of benefits.
In the majority of circumstances, workers’ compensation falls into the category of tax-exempt income when it comes time to file your income tax return. Other types of income that fall into this group include disability benefits paid from a not-at-fault auto insurer, compensation for other physical injuries, and payments for permanent disfigurements or loss of motor functions.
Triggers that make benefits taxable
As mentioned above, if you are already receiving supplemental security income, you may have to pay taxes on the workers’ compensation benefits. In most instances, you will receive a reduced amount of Social Security and any amount of workers’ compensation that, when combined with the Social Security, exceeds the original payments will be taxable. Fortunately, this amount is usually so small that most people are not put in a financial bind by having to pay the additional tax.
Situations where simultaneous payments occur
If you cannot recover from your work-related injury, you might find yourself in the position of receiving both disability benefits and workers’ compensation. For example, if you suffer a debilitating back injury that permanently limits your ability to work, you might end up receiving Social Security Disability and workers’ compensation benefits.
What to do
If you think your workers’ compensation benefits might trigger a taxable event, an accountant can help you structure the payout to reduce the effects. Before moving forward with a workers’ compensation claim, speak with a personal injury attorney about your case. The process can be extremely complicated, especially if your injuries are serious or permanent. Contact a Burlington attorney today for help with filing a claim or appealing a denial.