I suffered an on-the-job injury resulting in me being placed on workers' compensation disability payments. These payments however only cover about 1/2 of my salary and none of my benefits. My work however allows us to use our sick leave, vacation, and CTO to cover the other half of our salary and continue our benefits. My work is claiming that the pay they give me using my leave credits is taxable, however, I would not be using them except I was injured from a work related injury. I believe these still fall under the workers' compensation tax exempt status because it has a direct correlation to an on the job injury. Does anyone know where I can find it in the tax law. I have found two court cases stating sick time used while waiting for a disability retirement is not taxable but nothing yet to show a person who is just trying to recover and get back to work.
