Georgia’s injured workers receiving benefits may wonder if their workers’ Calendar - Tax Day Circledcomp benefits are taxable. The good news is: workers’ compensation benefits are not normally considered taxable income at the state or federal level.

Generally, IRS Code 104 states that amounts received under workers’ compensation acts in recompense for injuries or sickness are not considered income.  For example, an Atlanta employee suffering an occupational injury resulting in an entitlement of total disability benefits may receive, for instance, $12,000 in weekly income benefits. Her yearly W2 Wage and Tax Statement will not include that $12,000.  Additionally, should this Atlanta-based employee reach a settlement in her workers’ compensation case, the same IRS Code allows the settlement money to be tax sheltered.

tax form 1040There is one exception to this rule, however. A portion of the workers’ compensation income may be taxable if the injured worker is also receiving benefits through Social Security disability insurance (SSDI) or Supplemental Security Income (SSI), The combined workers’ comp and social security benefits need to remain below a certain threshold. In some cases, the Social Security Administration may reduce disability insurance payments to meet this threshold. The dollar amount of that reduction is what is considered to be taxable income of the workers’ compensation benefits. This is typically a relatively insignificant amount. However, every penny counts for injured workers who are off work.

At the Ramos Law Firm, we recommend you speak to your tax professional for further details about your individual tax situation.  Generally, an experienced workers’ compensation attorney can assist in structuring a settlement to maximize the non-taxable benefits.

The Ramos Law Firm has been supporting Georgia’s workforce for nearly a decade, practicing 100% Workers’ Compensation law. We are carry the “highest possible peer review rating in legal ability and ethical standards” as rated by Martindale- Hubbell, and have been selected by Super Lawyers in the 2015 listing. Visit our website and blog for trends and news affecting Georgia workers.