Workers’ compensation benefits are an important part of ensuring that an injured worker receives proper medical care and other help recovering from an on-the-job injury. However, it is important to understand how these benefits may create unanticipated complications for some workers, especially those who already receive social security benefits.
In some instances, workers who receive workers’ compensation benefits see their social security benefits reduced. In these cases, some of the workers’ compensation benefits may actually qualify as taxable income in a way, which they typically do not. While this does not mean people should refuse fair workers’ compensation terms, it does mean that they should understand how the benefits of workers’ compensation may affect other areas of their finances to avoid costly complications.
If your workers’ compensation benefits do reduce your social security benefits, the IRS may still tax you for the total social security benefits, even if you did not actually receive all of them. Clearly, this can blindside many victims and complicate recovery. Especially for those who already face difficulties making ends meet with social security benefits, a complicated tax burden can wreak havoc on many areas of a victim’s finances.
Should you face this dilemma, it is important that you understand your legal options. An experienced attorney who regularly navigates the complexities of workers’ compensation claims can help you examine your circumstances. With professional guidance, you can build a strong strategy that keeps your rights protected while securing the favorable settlement terms that you deserve. Be sure to protect yourself and the ones you love by seeking out all the help you need to focus on your recovery.
Source: FindLaw, “Are Workers’ Compensation Benefits Taxable?,” accessed Dec. 29, 2017