Are Workers’ Compensation Benefits Taxable in Atlanta, Georgia?

Many injured workers in Georgia ask us if their workers’ compensation benefits are taxable.  Fortunately, they are not normally considered taxable income at the state or federal level. 

 

Workers’ Compensation and Taxes

IRS Code 26 U.S. Code § 104 states that amounts received under workers’ compensation acts in recompense for injuries or sickness are not considered income.  For example, let’s consider an Atlanta employee, who was hurt at work and received weekly income benefits in the amount of $12,000 before she returned to work.  At the end of the tax year, she would not report the $12,000 to the IRS.  She would not receive a W-2 or 1099 form either.  These benefits are tax- free.

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.

 

 Attorney Bryan Ramos – Atlanta Work Comp Lawyer

 

There 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’ compensation 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 that 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. 

 

Your Georgia Workers’ Compensation Lawyers

At Ramos & Law, 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.

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

 

Georgia Law on Workman’s Comp and Taxes

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.

There 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.

 

Your Georgia Workers’ Compensation Lawyers

At Ramos & Law, 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.

 

 Attorney Bryan Ramos – Atlanta Work Comp Lawyer

 

 

Ramos & Law has been supporting Georgia’s workforce for nearly a decade, practicing 100% Workers’ Compensation law. We 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. Get our newsletters for trends and news affecting Georgia workers.