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Level 1
June 1, 2019
Solved

Is workers compensation income taxable

  • June 1, 2019
  • 1 reply
  • 3 views

I was out of work for a little over 5 months and during that time I received work mans comp pay, I need to know if the income I received is something I will have to pay taxes on since there was no taxes taken out of it to begin with.

Best answer by

No, workers compensation is NOT taxable. According to page 19 of Pub 525, under the heading, "workers comp", "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." https://www.irs.gov/pub/irs-pdf/p525.pdf

1 reply

Answer
June 1, 2019

No, workers compensation is NOT taxable. According to page 19 of Pub 525, under the heading, "workers comp", "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." https://www.irs.gov/pub/irs-pdf/p525.pdf

Level 2
June 17, 2019

Understand that workers' compensation payments are not taxable.  However, in some instances, an employer is ordered to pay a penalty (for late payment, for example) over and above the wage loss payments.    Would this penalty be taxable?