Image via WikipediaThe US Tax Court has ruled that workers' compensation payments are not excluded from US income tax under Section 104(a)(1) if they are paid as a Social Security Setoff Section 86(d)(3). The majority of the states permit Social Security to take the setoff. A minority of states allow a reverse setoff where the insurance carrier takes the setoff, and the workers' compensation benefits are reduced.
“Nevertheless, … we are duty-bound to apply the law as written by Congress to the facts as they occurred and not as they might have occurred. Because [the taxpayer's] Social Security benefits were reduced by the amount of workers’ compensation benefits received, that offset amount is treated as a Social Security benefit and is, therefore, taxable,” the court said.
Source: Dolan Media Newswires
For over 3 decades the Law Offices of Jon L. Gelman 1.973.696.7900 jon@gelmans.com have been representing injured workers and their families who have suffered work related accidents and injuries.
