Are My Workers’ Compensation Payments Taxable?

Workers’ Compensation payments are generally not taxable. If you are injured at work and receive compensation under the North Carolina Workers’ Compensation Act, those payments will be tax exempt. Your workers’ compensation payments are a fraction of the amount you were earning at the time of the accident. This is based on a percentage of your average weekly wage, and it is based on how severe your injury is.

Much like a personal injury settlement which is compensating you for your injury, you will not have to pay tax on the benefits you receive. While this may not sound logical, keep in mind that you are only being a paid a fraction of what you would have earned, and that you are being reimbursed for an injury—the fact that the reimbursement or payment is based on your salary or hourly rate is irrelevant as it relates to taxation.

Are My Workers’ Compensation Payments Taxable If I’m Receiving Social Security Income?

That question may lead to a different answer. There are circumstances under which some of your workers’ compensation payments may be taxable. One example is if you are receiving supplemental security income and also receiving workers’ compensation payments.

When you are receiving social security, your workers’ compensation payments serve to reduce the amount you are receiving from social security. To the extent this is true, that portion of your workers’ compensation payments are treated as social security payments and as a result, they are taxable.

While it is uncommon to receive both social security disability and workers’ compensation payments, this situation arises when the injured worker fails to recover from a work-related accident. In that circumstance, the worker may be entitled to both social security disability and workers’ compensation payments.

Speak With A Workers’ Compensation Attorney Today

If you have questions about workers’ compensation payments, social security disability payments, or taxation, you should speak with an attorney. Consultations with workers’ compensation and personal injury attorneys are free and help you decide your next steps. This includes choosing a personal injury attorney.

If you would like to speak with an attorney about your worker’s compensation case, we’re here to help. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article “Are My Workers’ Compensation Payments Taxable ?” was helpful, you may find other helpful articles on our Personal Injury Blog. Thank you for visiting the website—we hope it has been helpful.