Are Workers’ Compensation Benefits Taxable?

So you’ve been hurt on the job or you’ve developed an illness or disease because of exposure to hazardous or dangerous substances. Maybe it’s just caught up to you after a while—performing the same task over and over has led to carpal tunnel or some other form of repetitive stress injury. You notify employer, a claim is filed and approved and you start receiving benefits. If you look closely at your payments, you’ll notice that there are no taxes taken out. Does this mean you’ll have to pay them yourself? How are workers’ compensation benefits treated for tax purposes?

In New Jersey workers’ compensation benefits are not considered taxable income by either the state of New Jersey or the federal government, as long as they are paid through or in accordance with New Jersey’s workers’ compensation laws. Survivor benefits paid to loved ones after a death in the workplace or from an occupational disease are also exempt from taxation. The exemption, however, does not apply to any payments from company sponsored retirement plans, even if the retirement was in part a consequence of a work-related injury or illness.

There may also be limited circumstances where workers’ compensation benefits are taxable, if the beneficiary is simultaneously receiving Social Security disability benefits. For example, if you are receiving Social Security disability benefits and you file for and receive workers’ compensation benefits, the total amount you receive cannot exceed 80% of your “average current earnings ” before you were disabled. To the extent that it does, you may be required to offset, or reduce, the amount of SSD benefits you receive.

Contact Us

At Taylor & Boguski, we bring more than 70 years of combined legal experience to people throughout New Jersey. For a free initial consultation, contact our office online or call us at 856-200-8989.

We represent clients in workers’ compensation proceedings on a contingent fee basis. We won’t charge you attorney fees unless we recover compensation for your losses.

What to Do When Your Employer Won’t Submit Your Workers’ Compensation Claim

You’ve been hurt on the job and you’ve notified your employer as soon as possible. But your employer is just sitting on it, refusing or simply failing to pass your claim on to the workers’ compensation insurance carrier. You need the benefits, as you can’t work. What are your options?

Obviously, one of the most beneficial things you can do is hire an experienced and aggressive workers’ compensation attorney. But there are things you can do before or after you’ve retained counsel:

• Contact the workers’ compensation insurance company directly—Put together all medical records, get statements from witnesses, make copies and send everything to the workers’ compensation insurance company. Notify them of the date of the accident and the date you notified your employer. Follow up with a phone call and keep calling until someone takes action.
• Contact the state of New Jersey Division of Workers’ Compensation—If you don’t want to have to deal with your employer or the workers’ compensation insurance company, you can contact the state workers’ compensation office directly. You’ll need proof that your company had workers’ compensation insurance—this proof is required to be posted in a prominent place at your workplace. If you can’t find that, contact the Compensation Rating and Inspection Bureau. Bureau officials will be able to tell you if your employer complied with the law (requiring workers’ compensation insurance), as well as what company is providing the workers’ compensation coverage.

Contact Taylor & Boguski

At Taylor & Boguski, we have more than 70 years of combined experience representing injured workers across New Jersey. For a free initial consultation, send us an e-mail or call us at 856-200-8989.

We handle all workers’ compensation claims on a contingency basis. You won’t pay any legal fees unless we get compensation for your losses.