Do You Have to Claim Workers’ Compensation on Your Taxes?

Understanding Workers’ Compensation and Taxes

Workers’ compensation is designed to ensure that you are able to receive part of your salary while you are off work due to an injury that happened during the course of your duties. It can take some time to get your case reviewed and start receiving funds, but what happens when the money does finally start to come in? You need to know whether it will affect your tax bill or other areas of your finances.

Is Workers Compensation Taxable in Kansas

Workers’ compensation isn’t generally taxable in the state of Kansas. This means that you don’t have to worry about reporting your income on your federal income tax filings or for any state or local taxes. This can be a welcome relief for those who are trying to make ends meet while being off of work and receiving workers’ comp — which typically only pays about two-thirds of your normal salary.

The Social Security Disability and Supplemental Security Income Exceptions

While it’s true that workers’ compensation isn’t normally subject to income taxes, there are exceptions for some people who are receiving Social Security disability benefits or Supplemental Security Income. In this case, the total of your benefits and workers’ compensation can’t be more than 80% of the salary you were making when you were injured. If it is, your benefits may be reduced, and you could end up paying taxes on the amount of that reduction. This isn’t common for most people, but it is important to be aware of to ensure you aren’t faced with a hefty tax bill.

How Workers’ Comp May Affect Other Benefits

While receiving money for workers’ compensation won’t have an impact on your taxes, it can affect your eligibility for other government services and benefits. For some programs, such as SNAP benefits, workers’ compensation can count toward your household’s gross income. If you were receiving benefits prior to your injury, it shouldn’t affect your qualification because you’ll be receiving less than your usual salary, but if living on a lower wage has pushed you into needing assistance, it could affect what services and how much you qualify for.

Whether you are just starting your workers’ compensation journey, are dealing with a denial, or have questions about the funds you’re receiving, the legal team at Mann Wyatt Tanksley Injury Attorneys can help. We’re here to help clients better understand the workers’ compensation program, from whether their injury qualifies to what to do if the company doesn’t want to pay. Call our office at 877-388-8555 to talk to someone who can help.