When you’re no longer able to work because of a serious injury, it can be hard to support yourself and your family. It is for this reason that many people choose to file for workers’ comp benefits and Social Security Disability Insurance (SSDI). While these programs are extremely beneficial, they are also very complicated, leaving many beneficiaries confused about program requirements, including if their benefits can be taxed.
If you receive workers’ comp and are worried about your benefits being taxed, it’s a good idea to learn more about this program and its rules for taxation. Discover when workers’ comp benefits can be taxed and the reasons you may need to hire a workers’ comp attorney.
In general, workers’ comp benefits are not taxable. However, this can change when you receive both workers’ comp benefits and SSDI payments. When you receive both workers’ comp and SSDI, there is a threshold to the amount of monthly payments you can be given without taxation. If the total amount of your benefits is 80 percent or more than your current average earnings before your injury, then your SSDI will be offset or reduced, and this offset amount can be taxed.
Taxing Offset Money
If you’ve never received Social Security benefits before, then you’re probably unaware that this income is taxable beyond a certain point. Social Security can also result in taxation when your benefits are offset. The amount that your SSDI benefits are offset is also the amount of your benefits that will be subject to taxation.
If for example, the total combined amount of your SSDI and workers’ comp benefits is $1,700, your benefits will need to be offset if your pre-injury earnings averaged $2,125 a month. This is because $1,700 is 80 percent of $2,125. To bring you under the 80 percent threshold, your SSDI benefits might be reduced by $125, which would be considered taxable income.
Some states offset workers’ comp benefits instead of SSDI benefits. If you live in one of these states, then none of your workers’ comp benefits will be subject to taxation. Since workers’ comp rules can vary from state to state, it’s a good idea to consult with a workers’ comp attorney about whether your benefits will be taxed. Your attorney can help you go through your benefits and let you know if there are any taxes that need to be paid.
Talk with a Workers’ Comp Attorney
Receiving your workers’ comp benefits is crucial if you can no longer work due to an injury. Unfortunately, being approved for workers’ comp is much more difficult than you might believe, especially if you’re not familiar with the requirements of the program. Get help applying for your needed benefits by hiring a workers’ comp attorney from Heuser & Heuser, LLP.
The Heuser & Heuser legal team understands the complexities of the workers’ comp system, as well as the obstacles that may prevent you from receiving your benefits. Request a consultation with one of our attorneys today so that we can guide you through the workers’ comp system and help you decide if you’ll need to pay any taxes.