If you’ve been injured while on the job, workers’ compensation benefits can be extremely helpful in your road to recovery. Our Indianapolis, IN work injury lawyers help clients with the workers’ compensation process, whether it’s applying for benefits, appealing denied claims, or taking a good look at how these benefits may affect their financial situation.

Many clients ask if their benefits will be taxed. The answer can be complicated.

How Workers’ Compensation Benefits Work

Workers’ compensation insurance provides monetary benefits and/or medical care for workers who are injured or ill due to a workplace accident.

Benefits will help cover:

• The medical expenses to treat the injury or illness
• Replacement income while recuperating away from the job
• Costs related to job retraining
• Compensation for permanent injuries that result in disability
• Benefits to survivors of a worker killed while on the job

Workers’ Compensation Benefits Are Usually Not Taxable

For the vast majority of workers’ compensation recipients, their benefits will not be taxed.

This tax exemption applies to federal taxes as well as Indiana state taxes. This means that any workers’ compensation benefits received by an injured worker are tax exempt. The same applies to surviving loved ones collecting wrongful death benefits.

Even though the majority of people receiving benefits will have tax-exempt status on them, that is not always the case. Our Indianapolis work injury attorneys want to discuss an important exception to this rule.

Exceptions to the Rule: Workers Also Collecting SSI or SSDI

If you are also collecting Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), your workers’ compensation benefits will be taxed to an extent. Usually this means your workers’ compensation benefits will reduce your SSDI or SSI assets. This difference created will be subject to taxes depending on how much income you receive by the end of the year.

If this describes your situation, it’s a good idea to speak with your accountant or a tax professional about your workers’ compensation and Social Security Disability and how this may affect you during tax season. Preparing well ahead of time is preferable to facing a steep and unexpected tax bill when you file.

Advice from Our Work Injury Lawyers

If you have questions about your rights and obligations following a workplace injury, our Indianapolis occupational accident lawyers are here to help. We can answer your questions, address your concerns, and provide guidance on how to proceed.

Learn More About Workers’ Compensation Laws

For more information about workers’ compensation and what you should know after recovering from an on-the-job injury, speak with skilled work injury and accident lawyers. The team at Golitko & Daly can be contacted by phone at (317) 566-9600.