Exclusion from gross Income of amounts received from workman's compensation

Forum|Forum|4 years ago
February 7, 2022
2 replies
1 view

I received a letter from my employer verifying that I was absent from duty because of an injury incurred in the performance of duty. During the period of time, I was absent, my pay was not subject to state and local taxes under D.C. Code 1976 and Internal Revenue Code Title 26, Section 104(a)(1). How do I report this deduction utilizing TurboTax?

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Best answer by DoninGA

@dblopa wrote:

When my employer generated the W2, the exempt income was added to the total amount. It was not deducted. If workers compensation is not taxable income, but included on my W2, do you deduct the exempt amount from total earnings on the 1040. I have a letter from my employer indicating the amount that is not taxable.

If the amount that is not taxable is included as income on the W-2 in box 1 then you need to get a corrected W-2 from your employer.

HelenC12

Level 15

Workman's Compensation is not taxable on your federal return and not taxable on your state return. Since you don't enter your Workman's Compensation on your federal return, nothing will transfer to your D.C. return so nothing is taxable.

Per IRS Publication 525, page 19: Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they're paid under a workers' compensation act or a statute in the nature of a workers' compensation act.

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dblopaAuthor

Level 2

On my W2 if reflects the gross earnings in Section 1. Do I deduct the exempt monies from this amount or is there somewhere else to reflect this deduction? Thanks, in advance

DoninGA

Level 15

@dblopa wrote:

On my W2 if reflects the gross earnings in Section 1. Do I deduct the exempt monies from this amount or is there somewhere else to reflect this deduction? Thanks, in advance

Workman's Compensation income is not entered anywhere on a tax return. It is not taxable income nor deductible on a tax return.

dblopaAuthor

Level 2

When my employer generated the W2, the exempt income was added to the total amount. It was not deducted. If workers compensation is not taxable income, but included on my W2, do you deduct the exempt amount from total earnings on the 1040. I have a letter from my employer indicating the amount that is not taxable.

DoninGA

Answer

Level 15

@dblopa wrote:

When my employer generated the W2, the exempt income was added to the total amount. It was not deducted. If workers compensation is not taxable income, but included on my W2, do you deduct the exempt amount from total earnings on the 1040. I have a letter from my employer indicating the amount that is not taxable.

If the amount that is not taxable is included as income on the W-2 in box 1 then you need to get a corrected W-2 from your employer.