What are the tax effects of workers' compensation settlements?
When employees are injured on the job, they often receive payments from their employers to cover a number of expenses. While most forms of payments from an employer to employee have tax consequences, workers' compensation payments typically do not.
Assuming that the employer covers most or all of the medical and other expenses, the employee will not need to record the payments as taxable income. This provision in tax law is meant to give a benefit to those who have incurred large medical costs.
If you or anyone you know has questions about the tax implications of their workers' compensation payments, contact the Iowa workers' compensation lawyers of LaMarca Law Group, P.C., at 877-327-2600.