Are Workers’ Comp Benefits in Georgia Taxable?

It’s tax season, which means people who received workers’ compensation last year are calling to find out if their benefits have tax consequences. Whether workers receive weekly benefits or a single lump sum in injury settlements, they must find out if their benefits can be treated as taxable income to properly file taxes.

So, are workers’ comp benefits taxable in Georgia? The short answer is no, but there are exemptions and caveats you should be aware of that may suit your particular case. It’s always wise to contact an experienced Savannah workers’ compensation attorney or tax representative if you’re unsure of your exact specifications when it comes to workers’ compensation.

Tax-Exempt Benefits

Georgians follow the rules and regulations of the IRS along with the rest of America, which state that workers’ comp benefits are fully exempt from taxation. IRS Publication 525 provides guidelines encompassing these rules, stating that if benefits were paid under a workers’ compensation act or statute for an occupational injury or sickness, those benefits are fully exempt from tax.

The exemption also applies to your survivors, should your workers’ comp injury prove fatal. Also, if you qualify for a disability pension after retirement and it’s paid with a statute providing benefits only to employees with service-connected disabilities, you may be paid in part with workers’ comp. If this is the case, this part is tax exempt.

Non Tax-Exempt Benefits

If you receive retirement plan benefits based on your age, length of employment, or even from retirement due to your occupational injury, the tax exemption doesn’t apply. In the event that the injured worker returns to work, as is the case in many situations, any wages earned while still receiving workers’ comp benefits are considered taxable income – just as if you weren’t receiving the benefits.

If you achieve an especially agreeable settlement due to company-caused delay or misconduct, you could potentially receive benefits with interest. If this is the case, any interest paid to you is considered taxable income.

Other Workers’ Comp Considerations 

If you’re a low-wage worker who qualifies for workers’ comp benefits, your current government assistance benefits may see a significant change. If you’re receiving food stamps, Medicaid, cash assistance, SSI, or other government assistance based on your level of income, you’ll have to be reassessed to include your workers’ comp money.

Your government benefits may especially be jeopardized if you settle for one lump sum instead of low monthly payments, since it will boost your income level and possibly set you above the limit for qualifying for assistance. If you’re currently in a situation where your workers’ comp benefits could make you lose government or public assistance, don’t hesitate to discuss your options with an experienced Savannah personal injury lawyer.

Seek Help From Professionals

Workers’ comp benefits can quickly escalate into complex and multifaceted lawsuits where the injured worker’s needs are unfortunately not always put first. Companies and even healthcare facilities will try to downplay the injuries to save corporate money or reputation, leaving the injured worker feeling betrayed and defenseless.

If you believe you’ve been unfairly treated during your workers’ comp lawsuit or are having significant issues with taxation policies surrounding workers’ comp benefits, contact us for a free consultation today. The legal team of Eric Roden and Tyler Love at the Roden + Love, LLC law firm have combined many years of successful experience advocating for injured workers in Georgia.

We have extensive practice with Georgia’s two types of benefits: temporary total disability (TTD) and temporary partial disability (TPD). We know what it takes to qualify for income benefits. Our Savannah, GA injury and accident attorneys are also skilled with partial disability benefits (PPD), the most common type of workers’ comp claim. As our client, you’ll have access to our wide knowledge base and the resources of an established law firm at your fingertips. Contact us today for a free case evaluation and or legal consultation.