I owe taxes on workers' comp?
I live in Colorado. Last year I got hurt at work
and received workers' comp checks for about three to four months.
Do I report that as income? Because if I do, I was wondering why
nobody sent me anything for claiming that amount for my taxes.
The reason you didn't get a form from anyone is that workers' compensation
claims are not taxable. Amounts you receive as workers' compensation
for an occupational sickness or injury are fully exempt from tax
if they are paid under a workers' compensation act or a statute
in the nature of a workers' compensation act. The exemption also
applies to your survivors.
The exemption, however, 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 or injury.
If part of your workers' compensation reduces your
Social Security or equivalent railroad retirement benefits received,
that part is considered Social Security benefits and may
If you return to work after qualifying for workers'
compensation, payments you continue to receive while assigned to
light duties are taxable. Report these payments as wages on line
7 of Form 1040 or Form 1040A, or on line 1 of Form 1040EZ. This
means that just because you didn't get a form reporting the amount
received, you can't escape taxation if you feel well enough to go
back to work. It's enough to make you sick.