Tax tips for individuals who got workers’ comp benefits in 2022.
The IRS tax filing deadline for 2023 is April 18. This means it is time to start thinking about how much money is owed to Uncle Sam. We get frantic telephone calls this time of year from panicked individuals who never received a W2 or 1099 but collected wage loss benefits. They want to know: Do you claim workers’ comp on taxes in Michigan?
Here are some tax issues that everyone should consider when completing their 2022 returns. When it comes to paying taxes on income received from Michigan workers’ comp, the answer is generally “no,” because wage loss benefits that are collected are income tax free. Please remember that every situation is unique, and it is a good idea to speak with a tax professional before filing.
We are here to help with any questions about workers’ comp. The advice is free, and we only charge a fee on additional money that is collected.
Do you claim workers’ comp on taxes in Michigan?
In Michigan, you don’t need to claim workers’ comp wage loss benefits on your taxes because they are income tax free. Individuals collecting these benefits should receive 80% of their after-tax average weekly wage. These weekly payments help people who cannot work and continue for the entire period of disability.
What about light duty work?
Many people are given light duty while recovering from a workplace accident. Sometimes this occurs for days or weeks. Any money earned should be reported as it would most likely be considered taxable income. Watch out for employers who forget to send a W2 because this can cause issues.
What about payments for medical bills under workers’ comp?
Individuals who are hurt on-the-job should have all reasonable and necessary medical treatment covered. Money paid for these items is not taxable. Watch out for payments to relatives for “attendant care” as this could be taxable to the person who provides it.
Do you claim taxes on a Michigan workers comp settlement?
Workers’ comp is often settled for a cash payment. This is because it lets people move on with their lives. You don’t need to claim the money awarded to you from a Michigan workers’ comp settlement on your taxes because it is non-taxable. However, it could impact entitlement to government benefits so check with a tax professional about reporting.
Should I expect an IRS form if I got workers’ comp benefits?
Workers’ comp is not taxable, and you should not get an IRS form for payments. However, you need to watch for earned income during the calendar year. Most people are not hurt on December 31 and prior wages need to be reported. An employee may also owe taxes on retirement plan contributions or other benefits paid.
Have questions? Contact our Michigan workers’ comp lawyers now
If you are injured on the job in Michigan have questions about a workers’ comp claim or questions about taxes, call now or fill out our contact form for a free consultation. There is absolutely no cost or obligation. Our attorneys are here for you.
Our attorneys have been exclusively helping injured workers in Michigan for more than 35 years. Our attorneys can help you better understand Michigan work injury laws and what happens after someone has been hurt on the job. To see what our own clients have to say about the caring, compassion, and communication they received from us, you can read in their own words about their experience here on our testimonials page from clients we have helped.
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 (855) 221-2667 for a free consultation today.