Will I Owe Taxes on My Workers’ Compensation Benefits in Massachusetts?

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If you are injured in a workplace accident, you are entitled to file a claim for workers’ comp benefits. Benefits provided injured employees with medical treatment and wage assistance while they are out of work because of a workplace injury or occupational illness. Workers’ comp benefits are not taxable as income by the Internal Revenue Service or the State of Massachusetts provided they are paid pursuant to workers’ compensation laws.

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How Are Wage Replacement Benefits Calculated?

If you are out of work because of a workplace injury or illness, you are entitled to receive temporary partial or total disability payments. Because workers’ comp wage replacement benefits are limited, it is important that these benefits are not taxed. Injured employees usually need the entire amount to help pay bills and living expenses while they are out of work.

The amount you are eligible to receive is based on the current maximum benefit amount and your average weekly wage. If you are unable to perform any job duties, you can receive 60 percent of your average weekly wage for up to three years. For employees who can return to work part-time or perform light duty, they can claim 60 percent of the difference in their pre-injury wages and post-injury wages for up to five years.

However, there are maximum and minimum compensation rates that apply to both total and partial disability payments.  The Commissioner of the Division of Unemployment Assistance sets the rates each year on October 1. You can view the maximum and minimum rates on the EOLWD’s website. The maximum wage replacement benefits for workers’ comp claims set on October 1, 2016, was $1,291.74, and the minimum rate was $258.35. Those rates are likely to change for 2017.

How Does the Insurance Company Calculate My Average Weekly Wage?

It is very important that your average weekly wage is calculated correctly because your benefits are based on this figure. The insurance company will request wage records to use when calculating your wages. You want to make sure that the insurance company includes any bonuses and overtime in the wages to maximize the benefits you can receive while out of work.

Am I Eligible for Workers’ Compensation Benefits?

If you are injured while on the job, workers’ compensation insurance should cover your injury. Workers’ comp covers volunteers and immigrant workers who are injured at work. Self-employed individuals are only covered if they have paid for a policy that covers them in addition to their employees. To qualify for benefits, you must be an employee, and you must have been acting within the scope of your employment.

Benefits that you may be entitled to receive include:

  • Reasonable and necessary medical care including medications and physical therapy
  • Lost wage benefits as described above
  • Reimbursement for reasonable travel costs to and from medical appointments
  • Permanent disability or impairment benefits
  • Death benefits, if you are a dependent of an employee who died because of a workplace injury or illness

You should report any illness or injury to your employee immediately. Failing to report an injury or illness could negatively impact your ability to receive workers’ comp benefits. If you are denied benefits, or you are told that worker’s comp does not apply to your injury or illness, you should contact our workers’ comp attorney immediately for a free consultation.

Call a Massachusetts Workers’ Comp Attorney for More Information

Workers’ comp benefits should be straightforward; however, some cases can be complex. The system can be difficult to navigate in some situations. Our workers’ comp attorney can help you apply for benefits and appeal denials.

Contact Jim Glaser Law today at 781-689-2277 or fill out our online form to request a free case evaluation.