Like most Americans, you are probably gearing up for tax season. Compiling your taxes is challenging when you must grab all your tax forms like W2s, 1099s, 1098s, and any other income forms. The biggest question most people have is if their workers’ compensation, disability, or social security counts towards their taxes and income for the year.
If you were one of our clients during 2022, and we helped you receive workers’ compensation, you do not need to report it for your taxes. According to the IRS, you do not have to report any income from any workers’ compensation you received during the year. In fact, the IRS states that those who received workers’ compensation for any work-related injury or sickness through law or act such as compensatory (but not punitive) damages for physical injury or illness do not need to include the amount for their Earned Income Credit (EIC).
Social Security & Disability
If you received disability or social security during 2022, then you will need to count it for your EIC. However, if you received disability benefits under a no-fault insurance policy for loss of income due to your injuries, then you do not need to count it toward your EIC. This rule also applies to the permanent loss of function or total loss of a body part due to an accident.
Contact our staff here at Logan-Thompson, PC, if you have any additional questions.