Taxes and Your Disability Benefits Part I – With April quickly approaching, every responsible adult is worried about what to do about his or her taxes. While most of the tax filing process is much simpler than we are led to believe, there are certain questionable areas. For example, most income needs to be taxed. What about the Workers’ Compensation benefits? What portion of those benefits are taxable, and how do you file for that?
Taxes and Your Disability Benefits Part I
Well, there is good news for workers who receive work comp benefits. Since the benefits arrive with no 1099 or W-2 forms, the benefits are not taxable at all. Many benefits, like lost wages, are calculated based on gross wages and are actually already a percentage of full pay, which helps account for taxes before the issue comes up. Other income that is not taxable in general includes adoption expense reimbursements, child support payments, gifts, bequests, and inheritances, meals and lodging for employers’ convenience, welfare benefits, and cash rebates from a dealer or manufacturer.
Related: The Colorado Legislature Considers A Number Of Bills Affecting Workplace Rights
Workers’ compensation benefits on their own are not generally taxable at either the state or federal level. That is the good news. Unfortunately, in certain situations, when an individual concurrently receives benefits for disability from SSDI or SSI, a person’s SSDI and SSI may be reduced by the Social Security Administration, so together, the number of benefits and payments remain below a threshold called the workers’ compensation offset. Disability attorneys fight in order to give their clients as many benefits as possible with the hope of keeping individuals comfortable as they work through their illnesses to hopefully rejoin the workforce in whatever capacity is possible for them.
Additional Resources:
Taxes and Your Disability Benefits Part II: Supplemental Security Income
Taxes and Your Disability Benefits Part III: SSDI
Top Things to Know About Taxes and Workers’ Compensation Benefits
Workers’ Compensation can be difficult, confusing, and very complex. Kaplan Morrell has helped thousands of injured workers since 1997 get the benefits they deserve. Contact us here or call us at 303-780-7329 for your free consultation.
Connect with Kaplan Morrell
Facebook: https://www.facebook.com/KaplanMorrell
Instagram: https://www.instagram.com/workcompcolorado/
Twitter: https://twitter.com/kaplan_morrell
Sources:
http://www.disabilitysecrets.com/resources/workers-compensation/are-workers-comp-benefits-taxable.html, http://www.irs.gov/uac/Taxable-or-Non-Taxable-Income%3F-1
