According to the Florida Department of Financial Services, over 55,000 workplace injuries were reported in this state in 2019. The injured workers who file workers’ compensation claims rely on these benefits to cover their medical expenses and make ends meet if they are temporarily or permanently unable to work due to their injuries.

But if you are awarded workers’ compensation in Tampa, will you need to set some of your benefits aside to cover your taxes? Are workers’ compensation benefits taxable? A Tampa workers’ compensation attorney can answer all of your questions regarding your benefits. But here’s the general information you need to know regarding workers’ comp and taxes:

What Types of Workers’ Compensation Benefits Can You Receive in Florida?

There are three main types of workers’ compensation benefits that are awarded to injured workers in Florida: medical benefits, lost wages, and death benefits.

Medical benefits are awarded to cover the cost of treating your work-related expenses. These benefits will cover the cost of all medically necessary care and treatment related to your workplace injuries. You can also seek mileage reimbursement for the distance traveled to and from your doctor and pharmacy.

Many injured workers are temporarily or permanently unable to work as a result of their injuries. If this happens, the workers’ compensation system will provide benefits to make up for a portion of the worker’s lost wages. These benefits include:

  • Temporary total disability benefits, which are awarded when someone is temporarily unable to work at all while they recover from their injuries.
  • Temporary partial disability benefits, which are awarded when someone is able to perform work with restrictions while they recover, but is unable to earn 80% of the wages they earned prior to their injury.
  • Impairment income benefits, which are awarded when someone has suffered a permanent partial disability due to their injuries.
  • Permanent total disability benefits, which are awarded when someone has suffered a permanent disability that will completely prevent them from working again in the future.

If the victim suffers a fatal injury, the workers’ compensation system may award the surviving family members death benefits. These benefits may cover the funeral and burial expenses, loss of financial support, and other damages suffered by the family. Eligible surviving family members may receive a total of up to $150,000 in death benefits.

Is Workers’ Compensation Considered Taxable Income?

Typically, workers’ compensation benefits that are paid to workers who have suffered on-the-job injuries or illnesses are not considered taxable income. This means you usually will not have to report your benefits as taxable income.

But the laws regarding workers’ compensation and taxes are complex, so it’s important to dig a little deeper to understand how they apply to your unique situation.

How Will Your Return to Work Affect Your Taxes?

At some point during your recovery, your treating physician may allow you to return to work with certain restrictions. For example, your doctor may allow you to return to work as long as you work shorter shifts or avoid certain job duties until you are fully recovered.

If you return to work, you may be entitled to temporary partial disability (TPD) benefits if you are unable to earn at least 80% of your pre-injury wages due to your work restrictions. So, if you must work shorter hours due to your injuries, you may be awarded TPD benefits if you are earning less than 80% of your pre-injury wages as a result of these shorter hours.

You will still be paid by your employer for the light work you are performing, but you may also be awarded TPD benefits to make up the difference between your pre-injury wages and your current wages.

For instance, say you were earning an average of $1,000 per week before you suffered an on-the-job injury. You have returned to work with restrictions and are currently earning $600 per week. This is less than 80% of your pre-injury wages, so you are entitled to TPD benefits. To calculate these benefits, you multiple your pre-injury wages by 80%, or ($1,000 X 80%)= $800. Then, you subtract the wages you are currently earning for working with restrictions, so ($800-$600)=$200. Multiply this number by 80%, which is $160, to arrive at your TPD benefit amount. Basically, this means you will earn $600 per week from your employer for performing your job duties and you will also receive $160 per week in TPD benefits.

If you are in this situation, you will have to pay taxes on the wages you earn for performing work with restrictions. This is considered taxable income. You will not have to pay taxes on the workers’ compensation benefits you are awarded to make up the difference between your pre-injury wages and post-injury wages.

Are Workers’ Compensation Death Benefits Taxable?

Injured workers typically will not have to pay taxes on their workers’ compensation benefits. But if a worker suffers a fatal injury, will their surviving family members need to pay taxes on their workers’ compensation death benefits?

According to the Internal Revenue Service (IRS), the same tax laws apply to surviving family members. If your family is awarded workers’ compensation benefits after you suffer a fatal injury, they will not need to pay taxes on these benefits.

Let Our Attorneys Fight to Secure Workers’ Compensation Benefits For You

If you have been injured in the workplace, it’s in your best interest to seek legal representation from a skilled workers’ compensation attorney at Carlson Meissner Hart & Hayslett as soon as possible. Our team of aggressive attorneys has over 125 years of combined legal experience. We use our extensive experience to help each of our clients reach the best possible outcome in their case. Let us fight to secure the workers’ compensation benefits you need and deserve.