2006-12-27 04:58:54 · 5 answers · asked by linda b 1 in Business & Finance ➔ Taxes ➔ United States
It depends. Usually the defining factor is whether you paid for the workers' comp insurance or your employer did. If your employer did, then they are normally taxable by both federal and state. If you paid for the insurance, then it is usually NOT taxable.
However, some states allow for a breakdown of workers' comp payments, usually only if you take a lump sum settlement: they differentiate between payment for lost wages and payment for loss of body parts/functions/cosmetic losses. Some states do not pay for such things at all much less differentiate.
But if you personally paid for the insurance, which is usually a supplemental sort like Aflac, then it is never taxed unless, like any other insurance, its pay-off is excessive.
2006-12-27 05:13:40 · answer #1 · answered by roynburton 5 · 0⤊ 1⤋
"Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid uner a workers' compensation act or a statute in the nature of a workers' compensation act.... The exemption does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness of injury."
2006-12-27 07:02:55 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
See this link. Usually no but if retired then yes.
http://www.educationcentral.org/taxforms/Taxmap/pubs/p554-005.htm
2006-12-27 05:34:23 · answer #3 · answered by spicertax 5 · 0⤊ 0⤋
just to be on the safe side contact the compensation office they will inform you.
2006-12-27 05:03:12 · answer #4 · answered by maria fkun 4 · 0⤊ 0⤋
Yes, they are, by both state and federal tax authorities.
2006-12-27 05:01:24 · answer #5 · answered by Anonymous · 0⤊ 1⤋