# Question about workers compensation payments
**URL:** https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992
**Category:** Factual Questions
**Created:** [April 11, 2011, 7:52pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992 "2011-04-11T19:52:06Z")
**Posts on this page:** 10
**Page:** 1
### Author:  [@Lacunae\_Matata](https://boards.straightdope.com/u/Lacunae_Matata)
#### Post date: [April 11, 2011, 7:52pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/1 "2011-04-11T19:52:06Z")
My husband was recently injured at work, and is now receiving income replacement payments through his employer’s self-insurance fund. (The insurance is also paying for his medical treatment - surgery and physical therapy.) I’m just trying to figure out whether these payments are subject to income taxes, in case I need to set aside the money for next year’s tax season. I’ve Googled, but the Georgia LexisNexis site is making me cross-eyed, and if I’m gonna take advice from random strangers on the internet, I trust this site more than most!
FWIW, I’m in the state of Georgia, my husband works for a county government, and I understand that you may not be a lawyer or CPA or tax expert, and that even if you are an expert, you aren’t mine… etc.
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### Author:  [@dracoi](https://boards.straightdope.com/u/dracoi)
#### Post date: [April 11, 2011, 8:17pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/2 "2011-04-11T20:17:28Z")
Disability payments like Worker’s Comp are rarely taxed. I’ve learned to never say never on things like this, and to carefully review the client’s documents.
Benefits tend to be taxable (in my experience) when two scenarios are involved:
- lawsuit settlements for lost earnings: damages are not taxable, including damages for anticipated future medical expenses, but lost earnings are taxed like earnings would have been.
- temporary disability payments via the company’s sick pay policy (often a third-party)
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### Author:  [@Maggie\_the\_Ocelot](https://boards.straightdope.com/u/Maggie_the_Ocelot)
#### Post date: [April 11, 2011, 8:23pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/3 "2011-04-11T20:23:46Z")
No, temporary disability payments are not taxable. They are, however, subject to garnishes for child support, etc. if that is an issue for you.
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### Author:  [@Lacunae\_Matata](https://boards.straightdope.com/u/Lacunae_Matata)
#### Post date: [April 12, 2011, 12:28pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/4 "2011-04-12T12:28:26Z")
Okay, thanks! That confirms what information I was able to find and what I could parse from Georgia law.
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### Author:  [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)
#### Post date: [April 12, 2011, 2:17pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/5 "2011-04-12T14:17:26Z")
Sorry but disability and workerman comp payments are taxable, the same as unemployment payments. Last time I recieved workmans comp I did have to declare it.
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### Author:  [@anson2995](https://boards.straightdope.com/u/anson2995)
#### Post date: [April 12, 2011, 3:27pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/6 "2011-04-12T15:27:09Z")
[Workers Comp payments are _not_ taxable according to the IRS](http://www.irs.gov/publications/p525/ar02.html#en_US_2010_publink1000229331).
> [@](#):
>
> Amounts you receive as workers’ compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers’ compensation act or a statute in the nature of a workers’ compensation act. The exemption also applies to your survivors. The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury.
As a general rule, if you receive benefits that are taxable, you should receive a 1099-MISC form in the mail, with instructions about where to enter the infomation on your 1040.
Also, the OP used the phrase “income replacement payments”, which is something different, and which usually _are_ subject to federal taxation. Typically these are payments made to people out of work because of a disaster like Hurricane Katrina or the Gulf oil spill. ([link to IRS PDF](http://www.irs.gov/pub/irs-pdf/n1412.pdf)) This is not what the OP is talking about, since she refers to the payments coming from a self-funded insurance program. But for others who might stumble in here because of a google search, I want to make the distinction.
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### Author:  [@Lacunae\_Matata](https://boards.straightdope.com/u/Lacunae_Matata)
#### Post date: [April 14, 2011, 4:59am UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/7 "2011-04-14T04:59:56Z")
Oops! I may have used the wrong phrase, in an attempt to clarify.
What I was trying to use “shorthand” to express: My husband was injured at work, as a direct result of his professional duties. He injured his knee, and required surgery as a result of that injury. While he recuperates from that surgery, his employer’s insurance (which is a self-funded program in the state of Georgia) is paying him 60% of his salary, as reimbursement of the pay he would be earning if he hadn’t torn up his knee while running through the woods trying to catch a suspect.
Is that payment typically subject to income tax?
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### Author:  [@Maggie\_the\_Ocelot](https://boards.straightdope.com/u/Maggie_the_Ocelot)
#### Post date: [April 14, 2011, 6:07am UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/8 "2011-04-14T06:07:37Z")
No.
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### Author:  [@anson2995](https://boards.straightdope.com/u/anson2995)
#### Post date: [April 14, 2011, 2:35pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/9 "2011-04-14T14:35:04Z")
> [@Lacunae\_Matata](#):
>
> Is that payment typically subject to income tax?
The general principle is that if those payments are to replace wages, then they are taxed the same as wages. If they are to pay medical expenses, they are not taxed. Here’s what the IRS says ([same link as above](http://www.irs.gov/publications/p525/ar02.html#en_US_2010_publink1000229310)):
> [@](#):
>
> Generally, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. If both you and your employer pay for the plan, only the amount you receive that is due to your employer’s payments is reported as income. However, certain payments may not be taxable to you.
What you are describing sounds like it would be considered a disability payment not worker’s comp, but I’m unclear about the particulars. And since it sounds like he is a public employee, there may be specific state legislation about this. (Many states have specific tax rules about injured firefighters/law enforcement officers.)
My best advice is to contact his HR rep and ask them. They’ll know better than any of us.
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### Author:  [@Vorpal\_Blade](https://boards.straightdope.com/u/Vorpal_Blade)
#### Post date: [April 15, 2011, 3:33pm UTC](https://boards.straightdope.com/t/question-about-workers-compensation-payments/577992/10 "2011-04-15T15:33:30Z")
> [@anson2995](#):
>
> The general principle is that if those payments are to replace wages, then they are taxed the same as wages. If they are to pay medical expenses, they are not taxed. Here’s what the IRS says ([same link as above](http://www.irs.gov/publications/p525/ar02.html#en_US_2010_publink1000229310)):
>
> What you are describing sounds like it would be considered a disability payment not worker’s comp, but I’m unclear about the particulars. And since it sounds like he is a public employee, there may be specific state legislation about this. (Many states have specific tax rules about injured firefighters/law enforcement officers.)
>
> My best advice is to contact his HR rep and ask them. They’ll know better than any of us.
Also, it may be prudent to set aside an estimated amount for taxes. If it’s taxable you have the money. If it isn’t, presto, instant windfall.
vb