Abingdon, Bristol and Johnson City
In the wake of our countries biggest tax overhaul, you may be wondering if your workers’ compensation benefits are taxable. When you get hurt on the job, you rely on those benefits to support you finically – from paying bills, to putting food on the table for you and your loved ones. The last thing you want to worry about is if Uncle Sam will be asking for his cut.
While there are rare instances in which people end up paying taxes on their workers’ compensation benefits, the truth is most people don’t. Learn whether or not your workers’ comp is taxable, and when you should speak to an experienced workers’ comp attorney in Tennessee.
For the vast majority of cases, workers’ comp benefits are not taxable. The purpose of these benefits is to help you pay for medical expenses, and pay your bills, not for the government to make money. And, since workers’ comp is only a small portion of your usual pay, the IRS is not going to put a tax levy on it.
One instance in which workers’ comp is taxed is when they are offset by Social Security disability or SSI.
Social Security Disability and Taxes
Taxes in this scenario are determined by the combination of your Social Security disability and your workers’ comp. If both amounts combined equal 80 percent or more of your regular income, then your workers’ comp may be reduced by the amount over 80 percent. And, in this case, your workers’ comp benefits are taxable.
Here is an example of this scenario. If your total benefits are $200 – over 80 percent of your average income – your Social Security benefits will, therefore, be reduced by that amount, and $200 of your workers’ compensation benefits is considered taxable income. However, you may or may not be required to pay taxes, depending on your income threshold.
Depending on how much you make, your Social Security benefits may not be taxable. The threshold set by the government is $25,000 per year for single individuals and $32,000 for married couples. If you make less than that, even when including half of your Social Security benefits, you will not be required to pay taxes. In most cases of workers’ comp, individuals do not pay taxes. However, never hesitate to seek the advice of a tax professional when it comes to how much, if any, taxes you may owe the IRS.
Workers’ Comp Attorney in Virginia and Tennessee
If you have questions regarding your workers’ compensation benefits, need to file an appeal, or have any issues in seeking workers’ comp, seek the advice of an experienced attorney such as the Law Offices of Michael R. Munsey, P.C. For more than three decades we have been able to help our clients receive the compensation that they deserve. To get started with your free consultation, contact us by calling (276) 451-2056.
The Law Offices of Michael R. Munsey, P.C., are proud to serve clients in Bristol, Kingsport and Johnson City, TN, as well as Bristol, VA.