Are My Workers Comp Benefits Taxed?

When we first meet with a new client about their workers comp claim in Atlanta, they usually have a lot of questions. Obviously, their first concern is whether their claim will be approved. If their claim has been approved, they often want to know how much they’re going to receive in weekly benefits.

Some of our more savvy clients are more concerned with the tax consequences of their benefits than anything else. Once they find out that they’re only receiving 2/3 of their average weekly wages, they worry that if this money is taxed, they won’t have enough to survive on.

When you meet with one of our Atlanta workers’ compensation attorneys, they can explain the process to you in much more detail.

Here, we will discuss what the tax consequences are for people who collect workers comp benefits in the state of Georgia. If you still have questions about your own workers comp claim in Atlanta, feel free to contact our office directly.

We offer all new clients a free, initial consultation so they can have somebody with legal experience review their claim. Plus, most of our clients are much more comfortable knowing that they have an Atlanta workers compensation attorney by their side.

Your Workers Comp Claim in Atlanta Must Be Approved First

Before you worry about whether or not your benefits are going to be taxed, you first have to make sure you qualify for workers compensation. In Georgia, as in every other state, there are certain requirements you must meet if you’re going to receive workers comp benefits. Some of these requirements include the following:

  • your accident must take place on company time and on company property
  • you must report your injuries to your manager or human resources director right away
  • you cannot be under the influence of drugs or alcohol at the time of your accident
  • you must be treated by a state-approved workers compensation physician
  • you cannot work a second job while collecting workers compensation
  • you must participate in your medical treatment

Obviously, there are more requirements than the ones listed here. However, these are the big ones that you need to make sure you meet in order to collect benefits.

Your Workers Compensation Benefits Are Not Subject to Federal Income Tax

For those of you who are wondering what the tax implications are for workers comp, you’ll be happy to know that you do not pay federal income taxes on any workers comp benefits you receive. When you file your taxes at the end of the year, you will need to include all sources of income for tax purposes. You don’t want to make the mistake of including your worker’s compensation benefits as part of your income.

The reason you only receive 2/3 of your average weekly wages is because this money is not taxed. If you were to include this in your income, you would pay an additional 28%, on average, in taxes. This would mean that you were receiving less than half of what you normally would make. None of our clients can pay their bills with that kind of money.

workers compensation

You Do Not Have to Pay State Taxes on Your Benefits Either

Not only are you exempt from federal taxes, but when you file a worker’s comp claim in Atlanta, you don’t pay state tax either. Georgia is one of the states that follow the same rules and laws as the federal government. This means that you will not have to pay any state taxes on the workers’ compensation benefits you receive.

If you believe that you have a special case and want to get clarification on this issue, you can always contact one of our Atlanta workers’ compensation attorneys. They can answer any questions you may have and show you examples of how your taxes would be impacted with and without your benefits included as part of your income.

You Will Not Have to Pay Tax on Any Survivor Benefits Either

If your loved one was killed in a work-related accident, then you will likely be entitled to survivor benefits or death benefits. Normally, if you sue somebody for wrongful death and receive compensation, there can be tax implications on that money.

However, when it comes to any death benefits you receive through the workers compensation system, you will not pay any tax. Of course, you would probably want to meet with an estate attorney or tax attorney when you’re handling your loved one’s final affairs. The scope of your questions and concerns may go beyond what your Atlanta workers compensation attorney will discuss with you.

Your Atlanta Workers Compensation Attorney Can Go Over the Tax Consequences in Detail

If you were recently injured at work, it may be a good idea to call and speak with one of our Atlanta workers’ compensation attorneys.

One of the benefits of hiring an attorney early on is that they can help make sure your workers comp claim Atlanta is handled properly. From making sure that it’s filed on time, to ensuring that you get the benefits you deserve, having an attorney by your side will improve the outcome of your case.

Another benefit of hiring a lawyer is that they can go over the tax consequences with you. Many of our clients believe that their workers’ compensation benefits will be taxed, either by the state or by the federal government. As discussed here, since Georgia follows the federal tax laws, you will not have to worry about paying taxes on your workers comp benefits.

We suggest you contact our office and schedule your free, initial consultation with one of our Atlanta workers’ compensation attorneys. Your employer is going to have their insurance carrier and their team of attorneys working for them.

If you don’t have an attorney, you will be at a serious disadvantage. As far as insurance companies are concerned, they’re hoping that if they deny your claim, you’ll walk away. Your lawyer won’t let that happen. Since the initial consultation is free, you really have nothing to lose.