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What Tax Deductions Can You Claim On Workers’ Compensation?

Getting injured at work can be a traumatic experience. It could leave you in physical pain, financial debt, and emotional distress. Fortunately, Arizona has a workers’ compensation system designed to protect injured workers. It works by providing an insurance cover which pays out benefits to an employee until they can resume work. One of the concerns these workers have is how the benefits affect their taxes.

Generally, workers’ compensation benefits are not taxable. This is unless the amount provided is solely meant to cover lost wages. That said, receiving benefits can determine how you file your taxes. Below, we answer the question, what tax deductions can I claim on workers’ compensation?

If you have been injured at work and are having trouble receiving benefits, a Phoenix Workers Compensation Attorney can help you.


Is Workers Compensation Taxable?

According to IRS Publication 907, workers’ compensation for work-related injury or illness is not taxable. Both weekly benefits and lump sum payments are tax exempt. This means that you will not receive tax notification documents for your payments. You also don’t need to file your workers’ compensation benefits as income when filing your taxes.

That said, receiving Social Security Disability and Workers’ Compensation benefits simultaneously could trigger a tax obligation. An expert lawyer can help you better understand this exemption.


Work-Related Deductions

Workers’ compensation benefits are paid to an employee to offset the losses caused by a work-related illness or injury. They can be paid directly by the insurer or through the employer. While a portion of these payments are designed to cover lost wages, workers’ compensation is not a wage.

You cannot resume work and still receive workers’ compensation benefits. This means that, as you are not working, you are exempt from work-related tax deductions.


Can You Claim a Deduction on Workers Compensation? 

You might be required to present a medical certificate to the workers’ compensation authority as a condition for receiving your benefits. If acquiring this document requires you to travel, you could be entitled to a tax deduction for the travel costs.

A travel tax deduction on workers’ compensation can be claimed at cents per mile rate for the distance traveled from your doctor to the paying authority and back home. It can be based on out-of-pocket expenses for taxi or bus fares.

For instance, if acquiring a medical certificate forces you to travel to your doctor twice and costs you $40, you can claim this amount as a tax deduction. The calculations will depend on where you live.

However, it is important to note that this provision does not apply to medical treatment appointments. Any travel costs incurred to attend a treatment appointment are private and, thus, non-deductible.


Speak to a Phoenix Workers’ Compensation Attorney

What tax deductions can I claim on workers’ compensation? Generally, the answer will vary from case to case. Some workers are able to claim travel deductions for the expenses they incur attending medical appointments. An attorney can better help you understand your rights.

At Snow, Carpio, and Weekley, we have a combined work experience of over 100 years. We understand workers’ compensation laws in Arizona and can help protect your rights. Contact us at (877) 370 – 5788 to speak to a Phoenix Workers’ Compensation Attorney.

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