Are Workers Comp Benefits Taxable?

One of the questions a lot of our clients have is whether their workers comp benefits in Florida are taxable. The short answer to this question is no. You won’t be legally required to pay state or federal taxes on your workers compensation benefits. However, there are a few things you need to know about how these payments work. The best thing to do is to call a workers comp attorney in Miami, Florida. Not only can they answer any of your questions, but they can help you file your workers comp claim.

We’ve heard some people refer to the time a person is out on workers compensation as a vacation of sorts. This couldn’t be further from the truth. Not only are injured workers sitting at home in pain, but they’re also not receiving anything near what they were making before they got hurt. The fact that they won’t have to pay taxes on their benefits is not as much of an advantage as you may think.

Here, we’ll discuss what kind of workers comp benefits you can expect to receive. We’ll also discuss how taxes work for these benefits. Finally, we’ll take a moment to explain how your workers comp benefits can impact your social security.

How Much Will You Receive in Workers Comp Benefits?

Before we talk about whether your money will be taxed, it’s worth it to take a few minutes to explain how much money you’ll receive. While you’re out on workers comp, you’re entitled to 2/3 of your average weekly wages. If you’re used to making $800 per week, you’ll receive approximately $540 per week.

No matter how much you normally earn, the most you can receive per week is $1,099. For people who make a lot of money, this may not seem fair. Very few people can afford to survive on 2/3 of their normal pay. It doesn’t matter whether this money is taxed or not. It can be hard to pay your bills when you go from making $1,000 per week to just $666. And, for people who make closer to $1,500 or $2,000 per week, their pay will be cut nearly in half.

If you aren’t sure how much you’re entitled to, just show your workers compensation attorney in Miami, Florida a copy of your pay stubs. They’ll look to see what your average weekly wages were and then multiply that amount by 2/3.

Why Aren’t Your Workers Comp Benefits Taxable?

We’ve met with clients in the past who actually claimed their workers comp benefits on their taxes. Then they were confused when their taxes were adjusted. They simply didn’t understand why their workers comp replacement wages weren’t taxable.

As explained above, when you collect workers comp benefits, you’re only getting 2/3 of your average weekly wages. Every state has its own rules about the maximum amount you can collect. That number in Florida is $1,099. This is a lot higher than many other states.

You may wonder why you only get 2/3 of your average weekly wages. If you were receiving 100% of your wages and had to pay taxes, on average, you would still only clear about 2/3 of your gross wages. There isn’t all that much of a difference between your non-taxable workers comp benefits and your normal pay.

The only people who are really harmed by the system are those people who make more than $1,600 a week. They don’t actually receive the same amount they would’ve received in their net pay. Many higher income workers lost out on a large amount of income.

workers comp attorney in Miami Florida

Ask Your Personal Injury Attorney in Miami How Workers Comp Can Impact Your Social Security

One of the things you need to know about workers comp benefits is that they can impact your social security payments. It is rare that somebody would be collecting social security and workers comp. however, if you are, then you won’t be allowed to collect more than 80% of your total average income. This means that your social security benefits could be decreased if you’re collecting workers comp benefits as well.

What Happens if Your Workers Comp Claim is Denied?

If your workers comp claim is denied, you won’t have to worry about whether your benefits are taxable. If you find out that your claim has been denied, you’ll need a workers compensation attorney in Miami, Florida even more. An experienced lawyer can help fight your claim and file an appeal on your behalf. Worst case, they can file a lawsuit against your employer.

If your lawyer manages to get your claim paid, you may be entitled to retroactive payment. You won’t have to worry about this lump sum check being taxed either. It will be equal to 2/3 of whatever you normally would have earned during the period.

This retroactive payment will be dated back to the day you initially suffered your work-related injury (plus seven days). Since you have to be out of work for at least 7 days before you can file a claim, your case will likely be dated back to the beginning of your injury minus the 7 days.

Schedule Your Free Consultation With an Experienced Personal Injury Attorney in Miami

If you’ve recently suffered an injury at work, you should contact an experienced personal injury attorney in Miami. They can review your case and make sure your claim is handled properly. They’ll also explain how your workers comp benefits will be paid out. Workers compensation can be confusing. Not everybody is able to navigate the system by themselves. There’s no reason to do this when you can meet with a workers compensation attorney in Miami, Florida for free.

Call our office and schedule a date and time to come into the office. If need be, we can conduct your consultation over the phone or by video chat. Just make sure you have as much information as possible with you for this first meeting. Since the consultation is free, you have nothing to lose.

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