Michigan workers comp lawyer discusses tax issues for individuals who receive a lump sum cash settlement.
We are frequently asked about the tax consequences of a workers comp settlement. Our clients always want to know how much they need to put away to protect themselves.
Here is some information about workers comp and taxes. Remember, every situation is different and always seek the advice of a tax professional.
Settlements are income tax free
You should owe no income tax on your Michigan workers comp settlement. However, retirement plan contributions or other payments made by your employer could be taxable. Avoid this trap by meeting with a tax professional.
Eligibility for certain low income programs could be affected
It is possible that a lump sum cash payment could end your entitlement to certain government programs. Medicaid, SSI, and food stamps are some of the benefits that could be affected. Talk with an experienced lawyer before you settle a workers comp case.
Don’t forget your W2 or 1099
It is possible that you worked during the same calendar year as your settlement. This income could be taxable. Make sure that your former employer provides the necessary tax information so you dont slip through the cracks. A simple telephone call could save you much stress and anxiety.
Call (855) 221-2667 for a free consultation with a Michigan workers comp lawyer. Let our experience help you get the best possible recovery.
– Alex Berman is the founder of Michigan Workers Comp Lawyers. Hes been representing injured and disabled workers exclusively for more than 35 years. Alex has helped countless people obtain workers comp benefits and never charges a fee to evaluate a case.