Tax tips for individuals who got Michigan workers’ comp benefits in 2024.
The IRS tax deadline is Tuesday, Apr 15, 2025. 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 2024 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 These weekly payments help people who cannot work and continue for the entire period of disability. There is no income tax.
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 their reasonable and necessary medical treatment covered. Money paid for these items is generally not taxable. Watch out for payments to relatives for “attendant care” as this could be taxable to the person who provides it and is paid.
Do you claim taxes on a Michigan workers comp settlement?
Workers’ comp claims are often settled for a lump sum payment. 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 like Medicaid and SSI so check with a tax professional about reporting. We also recommend speaking with any attorney before any settlement.
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 any earned income during a 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.
Injured on the job in Michigan and have questions about a workers’ comp claim or about how taxes are impacted? Contact our lawyers now for a free consultation
If you are injured on the job in Michigan and have questions about a workers’ comp claim or questions about taxes, call now at (855) 221-2667 or fill out our contact form for a free consultation with an experienced workers’ comp lawyer. There is absolutely no cost or obligation. We’re here for you.
For more than 40 years, our lawyers have been helping people like you who have suffered from on-the-job injuries in Michigan. We understand the physical, emotional, and psychological hardships you are experiencing from your accident. We also have the skill, experience, and know-how to protect you and get you the best possible payout amount for your case.
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.
Remember, every work injury claim and settlement is different and must be negotiated on its own merits. Do not accept any payout amount without fully understanding your legal rights.
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 40 years. Call (855) 221-2667 for a free consultation today.
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