I am getting workers comp and it offsets my Social Security benefits. What are the tax consequences?
In Texas, there is no income tax (we pay the same amount of taxes in different ways. The name of the state should be “Taxus”) However Workers Compensation could become taxable as Federal Income tax if your workers’ compensation payments received causes a reduction in your Social Security disability benefits and you make too much other money. Then, the part of the reduction of Social Security benefits could be taxable as Social Security income. Less than one third of current Social Security beneficiaries pay Federal taxes on their benefits because they don’t make enough money. You will have to pay taxes on your SS benefits if you file a federal tax return as an “individual” and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income that is more than $32,000. Remember, workers comp only is countable if it reduces the SSA benefits and you make over the minimum amount. Also, the reimbursement of a medical bi
