How Will Your Workers’ Compensation Claim Affect Your Income Tax Return?
The sad reality is that most working people in the United States do not have much of a financial cushion. Even a minor medical expense can be financially devastating, even if you have employer-provided health insurance. Even illnesses and injuries that require little treatment but which cause you to miss work can mean the difference between living paycheck to paycheck by making ends meet and having to decide which bills get paid each month. For many working families, your income tax refund is the only money you get to spend on anything except bare necessities; you can use it for the splurge purchase you have been dreaming of all year, or else use it to make a dent in your debts, even if paying them down to zero is a pipe dream. Unfortunately, almost any kind of financial relief you might receive is taxable, thereby reducing your tax refund, if not making it disappear completely. Workers’ compensation is supposed to cover all the expenses related to your work injuries, without increasing your out-of-pocket medical expenses or counting as taxable income. Talking to a South Florida workers’ compensation injury lawyer shortly after a work-related accident occurs can help you avoid expenses that, legally speaking, should not be your responsibility to pay.
Are Workers’ Compensation Payments Taxable?
Any money that your employer pays toward your medical treatment in relation to your workers’ compensation claim is not taxable. Likewise, workers’ compensation settlement money that you receive to reimburse you for lost income is not taxable. If workers’ comp is paying for your treatment, but you are still able to work, then you will pay taxes on your regular income, but the money you receive from workers’ comp is not taxable.
Will You Have Any Out-of-Pocket Medical Expenses If You pay for Workers’ Comp?
Your employer draws a clear boundary between the medical expenses they will pay and the expenses they will not cover. They are supposed to pay for all the medical expenses related to treatment for your work-related injury, including physical therapy and transportation to and from medical appointments if applicable. The trouble usually starts when the workers’ compensation doctor decides that you have made a full recovery (or else that you have reached “maximum medical improvement,” which means that you have regained as much of your health as you are going to regain), your employer stops paying. After that, you are on your own to pay for copays, deductibles, and all other medical expenses not covered by your usual health insurance. It is unsurprising, then, that many workers’ compensation disputes center on the issue of whether the injured worker requires additional treatment for the work-related injury.
Let Us Help You Today
A Sunrise workers’ compensation lawyer can discuss with you how a workers’ compensation claim could affect your finances in the short term and the long term. Contact the Law Offices of David M. Benenfeld for more information.
Resource:
irs.gov/pub/irs-pdf/p4345.pdf
