topic Is worker comp Settlement considered income? in Get your taxes done using TurboTax

Is worker comp Settlement considered income?

saharrason — Sat, 01 Jun 2019 03:05:30 GMT

I received a workers comp Settlement for 11,900.00 is this considered income?

No, workers' compensation benefits are not taxable income...

MichaelMc — Sat, 01 Jun 2019 03:05:31 GMT

No, workers' compensation benefits are not taxable income.

"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, doesn't 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." Source: IRS Pub. 525 Taxable and Nontaxable Income, page 18.

Re: Is worker comp Settlement considered income?

thetiger2945 — Sun, 20 Oct 2019 22:46:50 GMT

The answer I see answers a question about the worker's compensation, not the settlement.

Is the settlement you get to close the case taxable?

Re: Is worker comp Settlement considered income?

kitkatbk — Sat, 30 Nov 2019 17:33:23 GMT

I'm looking for that same answer.

Re: Is worker comp Settlement considered income?

Critter — Sat, 30 Nov 2019 17:42:44 GMT

If the workmans comp was not taxable then the lump sum is also not taxable ... you just got one final amount so the insurance company can stop making monthly payments which could continue for years. By accepting the lump sum you let them off the hook for future payments ... this most likely will not be in your favor in most cases which is why the ins companies like to do it... they dangle a large sum in front of you and you grab it however this is to cover all future medical expenses that you are now on the hook for.

Read the IRS pub starting on page 19 : https://www.irs.gov/pub/irs-pdf/p525.pdf

Other compensation.

Many other amounts you receive as compensation for sickness or injury aren't taxable. These include the following amounts.

• Compensatory damages you receive for physical injury or physical sickness,
whether paid in a lump sum or in periodic payments.

Re: Is worker comp Settlement considered income?

ajowens04 — Tue, 11 Feb 2020 14:51:48 GMT

What if you receive a 1099-Misc for the settlement? Is it taxable then?

Re: Is worker comp Settlement considered income?

DMarkM1 — Tue, 11 Feb 2020 15:27:50 GMT

Workmen's compensation is not taxable and should not have been reported on a 1099-MISC. Here is a link with some available options for you.