Could Your Tax Returns Be Affected by Workers’ Comp?


When an employee is hurt on the job in Arizona, they are entitled to workers’ comp benefits to cover their medical expenses and some of their lost income. As with any other aspect of life, though, those who wish to reap the benefits of such programmes must do so with an eye toward the future. Taxes do not need to be paid on workers’ compensation payments.

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Income Taxes and Workers’ Compensation in Arizona

In most cases, workers’ compensation payments to people who have been injured on the job are not taxable. Because of this, they won’t need to do anything out of the ordinary to file their taxes and receive a refund.

Workers’ compensation benefits are not regarded as taxable income either at the state or federal level. Traditional workers’ compensation payments can be made in the form of either a single, large payout or smaller, periodic payouts to the claimant over time. There will probably be no W9s or 1099s handed out to people to show them how much money they’ve made thanks to tax breaks.

Workers’ compensation benefits are not subject to taxation; however, other benefits, such as Social Security Disability (SSDI) or Supplemental Security Income (SSI), maybe (SSI).

Those who suffer a permanent injury on the job and subsequently file for various types of benefits would be eligible to receive such payments. Workers’ compensation benefits may be subject to taxation if the recipient is also receiving Supplemental Security Income or Supplemental Security Disability Insurance.

An individual’s Social Security Disability Insurance or Supplemental Security Income benefits may be reduced by the amount received as workers’ compensation benefits in cases where both are received. This is done to make sure that an injured person does not receive more than 80% of their pre-incident income.

Also, remember that a person is still required to pay taxes on any income they earn, regardless of whether that income comes from returning to work at all, returning to light duty, or returning to work at a different job than the one they sustained their injury at. A worker’s compensation claim could be jeopardised if the injured worker actively seeks new employment while receiving benefits, especially if the individual tries to conceal the fact that they are working another job.