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Do I have to pay taxes on my workers comp settlement?
A common question received about benefits is, “are workers comp benefits taxable.” This question is often considered based on filing income tax. What you should realize is that unlike standard income you might receive from your employer, you do not have to file income taxes in the same way for workers compensation benefits. Although you may need to report this information, you may not have to pay taxes on it. If you are unsure if you do need to pay taxes, or are interested in more information, contact an attorney focusing on workers compensation or your tax professional. Your situation may be unique.
While most income you receive must be reported as income unless it is specifically listed as exempt income, you may not have to file and pay taxes on your workers compensation claim. Here are a few things you should know about this:
In many situations, workers compensation benefits are provided due to an injury or accident you did not cause yourself. Therefore, paying income tax is often not necessary. However, each situation is unique which is why you should consider hiring an attorney before filing your taxes.
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