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Do I Have to Pay Taxes on My Workers Compensation Benefits?


Workers compensation laws in Missouri are rather complex, and as a result, many workers have a lot of questions, including “are benefits taxable?”

should you hire a workers comp attorney

Most employers in Missouri are required to carry workers compensation insurance for their employees. In the event that someone gets hurt or sick as a result of their job activity, then the compensation will cover the cost of their medical treatment and even account for lost wages if the worker can’t resume their normal work activity.

Workers compensation laws in Missouri are rather complex, and as a result, many workers have a lot of questions about how they are reinforced, specifically about whether these benefits are taxable or not.

What Does the Law Say About Paying Taxes on Workers Comp Benefits?

Workers compensation benefits in Missouri are not taxable under normal circumstances. If, however, the worker also received Social Security Disability or Supplemental Security Income, a portion of the workers compensation benefits may be taxed.

Generally speaking, workers compensation benefits fall under the IRS’ non-taxable revenues which can also include:

  • Damages paid because of a personal injury settlement;
  • Payments from public welfare funds;
  • Disability benefits;
  • Compensation for permanent or temporary loss of a body part or function.

If you were injured at work or became sick because of that environment, you can rest assured. Workers compensation benefits are generally exempt from tax. The same principle applies to families receiving compensation after a family member dies at work.

What Are the Exceptions?

Simply put, if you receive any other security income on top of the workers compensation benefits, then you may have to pay taxes. The amount is most often the difference between the payments offered for your injuries and workers compensation.

Why Would You Be Awarded Both?

Sometimes, the injury sustained by the worker can cause long-term effects, such as temporary or permanent disabilities. Because of this, the worker can also become eligible to receive disability insurance and workers compensation at the same time.

You should also know that if you are awarded both, the Social Security Administration will most likely reduce your payments while you are receiving workers compensation. When those payments stop, you can file a form and increase the disability insurance payments if you need to.

Updated: April 4, 2024
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