Are Workers Compensation Benefits Taxable?
When we meet with new clients, one of the first things they ask us is how much money they’re going to receive. They don’t seem overly concerned about their medical bills being covered. Perhaps this is because they assume that workers compensation will take care of them. Once we explain how the benefit system works, the next question they ask is whether their workers compensation benefits are going to be taxed. Our workers comp attorneys in Charlotte, North Carolina explain that neither the state nor the federal government will tax these benefits. That’s one of the reasons why you only receive 2/3 of your average weekly wages instead of your full pay.
Here, we’ll discuss what the benefits are in North Carolina under workers compensation. We will also briefly discuss how you can qualify for these benefits. Finally, we will explain how much your workers compensation benefits will be, and whether they are indeed taxable.
If you or your loved one have been involved in a workplace accident, you probably have a lot of questions and concerns. We suggest you contact our office and speak with one of our personal injury attorneys in Charlotte. Not only can they answer your questions, but they can also help you file your claim for workers compensation benefits.
What Workers Compensation Benefits Are You Entitled to In North Carolina?
In North Carolina, when you’re approved for workers compensation, you’ll receive three different types of benefits. The first type is medical coverage for any injuries sustained in your accident. The second type of workers compensation benefits are replacement wages that you’ll receive until you are fit to return to work. Finally, if needed, you’ll also be entitled to career training or rehabilitation to help you find a different position if you’re no longer able to perform the same work you did prior to your injury.
In order to collect any workers compensation benefits, you first have to be approved for workers compensation. Some people assume that they’ll receive workers compensation benefits if they get hurt on the job. The truth of the matter is that your employer has the power to either approve your claim for benefits or deny it. They could deny it for a variety of reasons, including:
- They believe your injuries took place outside of work
- They think that you’re exaggerating your injuries
- You have a history of filing workers comp claims shortly after joining a new employer
- Your employer believes you were under the influence of alcohol or drugs at the time of your workplace accident
- You did not report your injury to your manager or your human resources director in a timely fashion
- You refused to be treated by a state approved workers compensation doctor
- Your employer learns that you’ve been working at a second job the entire time you’ve been out on workers compensation
Regardless of the reason for your denial, our personal injury attorneys in Charlotte will help you file an appeal. The only situation in which you will not have a chance to file an appeal if you were intoxicated or under the influence of alcohol or drugs at the time of your injury. While some employers in North Carolina are generous enough to cover a stint in rehab, most of them will refuse to pay your claim and terminate your employment.
Can Your Charlotte Workers Compensation Lawyer Help You Qualify for Benefits?
One of the reasons we recommend that you meet with a Charlotte workers compensation attorney early is because they can help you file your claim. If you don’t file your claim properly the first time around, your workers compensation benefits could be denied. Even if your appeal is approved, it could be weeks or months before you see any benefits.
When you first meet with your attorney, they’re going to ask you what happened. Based on your statement and any information they have from your employer or the insurance company, your Charlotte workers compensation attorney will determine whether they believe you are entitled to workers compensation benefits.
In North Carolina, to qualify for workers compensation benefits, you must meet the following criteria:
- Your injury must take place on the job or on company property
- You must be acting within the scope of your employment at the time of your accident
- Your injury must not be related to an outside event or a previous medical condition
- You must report your injury promptly to your manager or human resources
- You submitted to the drug test as required by company policy
- You were seen by state approved workers comp doctor and complied with your treatment plan
Ideally, your claim will be approved, and you’ll start to receive your workers compensation benefits in a couple of weeks. However, your employer or the insurance company may find reasons to deny your claim.
Are Your Workers Compensation Benefits Taxed by Either the State or the IRS?
One of the nice things about being on workers compensation is that your income is not taxable. Neither the state of North Carolina nor the IRS will treat your workers compensation benefits like ordinary income. This is one of the reasons why instead of receiving your full salary, you’ll only receive 2/3 of your average weekly wages. The alternative would be to pay your full wages but to tax them at the rate you normally would be taxed.
When our clients receive their first benefit check, they’re usually shocked at how small it is. Although we warn them that they only receive 2/3 of their average weekly wages, some part of them believes that they’ll receive more than we tell them they will.
We try to explain that they would have had two choices. First, they could have received their total wages and have to pay taxes after the fact. This is never a good idea because if you do not pay the tax properly you can be fined or potentially charged with tax fraud.
The other option is to receive 2/3 of your normal wages and not have to worry about paying a tax. This is what the legislature in North Carolina has decided to do. Of course, if you want the state to take additional monies out of your workers compensation benefits you can request to do so. However, in our experience, very few clients ever move this request.
Contact an Experienced Personal Injury Attorney in Charlotte Today
If you or your spouse have recently been involved in a workplace accident, you would benefit from the assistance of a personal injury attorney in Charlotte. We recommend that you contact our office within days of your injury so that we can help you prepare your initial workers compensation benefits claim. We offer you a free, initial consultation. Take advantage of this opportunity to sit down with an experienced lawyer and ask them any questions you may have.