Tax tips for employees who received workers’ compensation in 2017 and why you don’t always receive an IRS Form W-2.
We get lots of telephone calls regarding income taxes and workers’ compensation during tax season. Disabled employees want to know if they must pay income taxes on weekly benefits and/or lump sum settlements. Workers’ compensation benefits paid to individuals hurt on-the-job are income tax free.
Employees who receive $600 or more in other income should receive an IRS Form W-2. This document shows what has been paid and tax withholding. The deadline for employers to provide IRS Form W-2 is January 31, 2018.
Disabled employees who never worked in 2017 probably won’t get an IRS Form W-2 from their employer. It is important to speak with a tax professional about how workers’ compensation benefits should be reported to the federal government.
Some people who suffer a workplace injury return to light duty work. These employees are sometimes paid regular wages instead of workers’ compensation benefits. Income paid as regular income can be taxable.
Employees who worked in 2017 before or after getting hurt on-the-job could also have tax liabilities. The same is true for employees who work multiple jobs.
Some of our clients receive both workers’ compensation and Social Security Disability (SSDI). This has the potential to create an offset and this could also result in tax consequences.
We strongly recommend anyone who has received workers’ compensation benefits speak with a tax professional to ensure compliance with federal and state law.
Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (844) 316-8033 for a free consultation today.
Related information:
Can I get workers’ comp benefits and Social Security Disability at the same time?
Photo courtesy of Creative Commons, by 401(K) 2013.
