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Will I Owe Taxes on My Workers Comp Benefits?

Workers compensation benefits are non-taxable in Indiana. These benefits fall into the same category of non-taxable income as disability benefits, public welfare, and compensation for permanent loss or disability after a personal injury accident. It is important that these benefits are not taxed because you do not receive full compensation for your lost wages. Therefore, any deductions would only make it more difficult to pay bills and living expenses while you are out of work recovering from an injury on the job.

What Is Workers Compensation?

When you are injured on the job, workers’ compensation pays benefits through a no-fault insurance system. However, the injury must have occurred while you were engaging in your normal work activities. In most cases, workers’ compensation is your only recourse when you are injured on the job except for a few limited circumstances when you may be able to sue a third party.  Because it is a no-fault system, you are typically unable to sue your employer unless your employer intentionally caused your injury.

What Does Workers Comp Pay?

When you are injured in a workplace accident, you are entitled to certain benefits under Indiana’s workers’ comp laws. Your reasonable and necessary medical bills are paid for by the workers’ comp insurance company. In addition, you may also be entitled to receive one or more of the following benefits:

  • Wage benefits while you are out of work because of a work-related injury;
  • Compensation for permanent disability or impairment; or,
  • Death benefits for family members of an employee whose death is the result of a covered workplace accident.

An experienced workers’ comp attorney can explain the benefits you are entitled to receive depending on the facts of your case. An attorney can also help you seek all benefits you are entitled to receive by law from the insurance provider.

How Much Will I Receive for My Lost Wages?

Because workers’ comp does not fully compensate you for your lost wages, it is helpful for injured workers that these benefits are not taxable. You are entitled to receive wage benefits while you are unable to work because of a workplace injury.  The amount you can receive is calculated based on your average weekly wages. By law, you can receive two-thirds of your average weekly income while out of work up to the maximum payment set by the Indiana Legislature.  You can continue to receive TTD (temporary total disability) payments until your doctor releases you to return to work for up to 500 weeks.

For workers who are able to return to work part-time or who can perform light duty but do not earn the same amount as their average weekly wage before the accident, they may be entitled to receive temporary partial disability payments. These payments are the difference between what you are earning right now and two-thirds of your average weekly wage before your injury. You may only receive temporary partial payments for 300 weeks.

Get Help with Your Workers Compensation Claim

If your employer or its insurance provider tells you that workers’ compensation does not cover you, you need to contact a workers’ comp attorney as soon as possible. Your time to file a claim or appeal a denial of a claim is limited by law.  Therefore, contacting a workers’ comp attorney as quickly as possible after your accident is important.

If you are injured on the job, call our office for a free consultation. Contact The Ken Nunn Law Office by calling 1-800-CALL-KEN or 1-800-225-5536 or by using the Live Chat feature on our website. Request your no-obligation case evaluation today from an experienced workers’ comp attorney.

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