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
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