I received less than $800 in workers compensation benefits this year. Do I have to claim the benefits and what are the rules?

ANSWER

Expert Maria Golod's Answer:

Per IRS Publication 525, amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act.

The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury.

Maria Golod, CPA

New York

10 yrs experience

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