I have been representing injured workers for almost all of my 28 years of practice. At least once during each case I am asked by my client if he/she has to pay income tax on benefits paid under worker’s compensation. The quick answer is no. Worker’s compensation payments are not taxable for social security, federal tax or state tax purposes. You do not have to report it as income on your tax returns.
Temporary total disability benefits are paid when you are injured on the job and unable to work at all. Generally, you are paid two-thirds of your average wage or salary. For that reason, taxes are already taken into account.
Again, permanent partial or permanent total disability benefits are paid based on a number of factors. In any event, regardless of what type of benefit you are paid it is not considered taxable income so you do not have to report it or pay tax.
If you or a loved one have been injured on the job and have any questions about your worker’s compensation rights please contact me for a no cost, no obligation consultation. If we accept your case we take these cases on a contingency fee basis which means you pay nothing for fees unless and until there is a recovery. In the Dane county area call (608) 824-8540, in the Sauk County area (608) 356-3961 or statewide call (866) 455-2993 or check out our website at https://khtlawyers.com for more information.