Are Workers’ Compensation Benefits Taxable in Pennsylvania?
One of the most common questions we receive at ARM Lawyers is, “Are my workers’ compensation benefits taxable?” Understanding the tax implications of workers’ compensation benefits is essential for anyone receiving these payments in Pennsylvania. Let’s dive into the details.
Watch the video to hear PA workers’ compensation attorney, and founding partner at ARM Lawyers, Joshua B. Goldberg give his answer to the question “Are workers’ compensation benefits taxable?” and continue reading to get a more detailed explanation in this blog post.
Is Workers’ Compensation Taxable?
The good news is that workers’ compensation benefits are not taxable—either by the federal government or the state of Pennsylvania. This is because workers’ compensation is designed to replace a portion of your wages after a work-related injury or illness. Since you’re already losing a percentage of your regular income, these benefits are non-taxable to prevent further financial strain.
Workers’ compensation benefits typically only cover about two-thirds of your average weekly wage. If these benefits were taxable, it would further reduce the income you rely on during a time when you’re already facing challenges, whether from medical bills, recovery, or other costs.
No Need to Report Workers’ Compensation on Your Tax Return
Because workers’ compensation benefits are tax-exempt, you do not have to report them on either your federal or state income tax return. This means that when you receive these benefits, they won’t count toward your taxable income. It’s important to note, however, that any other income you earn, such as from a second job, would still be taxable.
Exceptions to Be Aware Of
While workers’ compensation benefits themselves are non-taxable, there are a couple of exceptions where taxation might come into play:
- Social Security Disability Benefits Offset: If you receive both workers’ compensation and Social Security Disability Insurance (SSDI) benefits, your SSDI payments may be reduced (or offset) by the amount of workers’ comp you receive. In some cases, the portion of your SSDI benefits that was reduced could be taxable.
- Interest on Delayed Payments: If you win a lump sum in workers’ compensation due to a dispute or delay in benefits, any interest on those payments may be subject to taxation.
If you’re unsure how your situation might be affected by these exceptions, it’s a good idea to speak with a knowledgeable attorney who can help clarify your tax obligations.
How a Pennsylvania Workers’ Compensation Attorney Can Help
Navigating workers’ compensation claims and understanding your benefits can be complicated. That’s why working with a skilled workers’ compensation attorney in Pennsylvania is critical. At ARM Lawyers, we:
- Help ensure you’re getting the full benefits you deserve under the law
- Assist with disputes or claims denials to get your payments back on track
- Clarify any tax concerns you might have regarding your benefits
We understand how overwhelming it can be to manage a workers’ comp claim while also dealing with an injury. That’s why our team is here to guide you through the process, fight for your rights, and ensure you receive the benefits you’re entitled to.
Contact ARM Lawyers Today
If you have more questions about the taxability of workers’ compensation benefits or need assistance with your claim, don’t wait—contact ARM Lawyers today. Our experienced attorneys will review your case, answer your questions, and help you through the legal process. We’re here to ensure that you’re fully protected during this challenging time. Reach out today to schedule a free consultation!
Attorney Goldberg practices out of our Stroudsburg office, but he covers cases across multiple Counties in PA. Check our office locations to see if we practice Pennsylvania workers’ compensation in your area.
