Is Workers’ Comp Taxable Income?
workers’ compensation benefits are not taxable. This includes both the state and federal level. However, there may be
some exceptions to this, including individuals who receive compensation
alongside other benefits such as Social Security Income or Social security
If your combined compensation meets a certain threshold, the Social Security
Administration (SSA) may need to offset the workers' compensation benefits
by reducing other benefits.
The difference between the amounts you get from each income may be taxable. However, most people who receive both SSD and workers’ compensation
typically don’t owe taxes.
Understanding Workers’ Compensation Liens
Section 21 of the Illinois workers' compensation act governs liens on workers'
As a general rule there are no liens in workers' compensation cases. However,
an exception exists if there is unpaid child support owed. If this is the case and the insurance company or employer is properly
served and notified of the child support lien, it is enforceable against
the injured workers TTD checks and settlement. Recent Illinois case law
has also found enforceable liens against an injured worker’s settlement
by the Illinois Department of Public Aid.
Workers' Comp Penalties Against Employers
Section 19 of the Illinois Workers' Compensation Act governs the award
of penalties against the employer. Two provisions, 19(k) and 19(l) may
become relevant depending on the conduct of the employer in defending
the injured workers claim.
19(l) penalties take the form of late fees for delay in payment of an award after trial
or in paying TTD benefits. 19(l) takes the form of a late penalty against
the employer, computed at $30 a day with a maximum of $10,000.
19(k) penalties require a finding of vexatious conduct on the part of the employer in
defending the claim. These penalties require a finding on the part of
the employer of bad faith. 19(k) penalties are computed at 20% of disputed
medical, 20% of the disputed TTD withheld, and in some rare cases 20%
of the prospective medical not approved by the employer once the costs
of that medical are determined.
Workers’ Compensation Settlements
There is no provision of the Illinois workers' compensation act that guarantees
the injured worker a settlement following the conclusion of medical treatment.
The belief that the insurance company or employer will offer you a settlement
may be a mistake. Often times once medical treatment has concluded the
insurance company or employer will simply close the claim.
The value of a claim depends on the following factors:
- Permanent partial disability sustained
- Ability to return to work full-duty
- Wage loss or earning impairment incurred, if any
- Ability to return to any type of gainful employment
Our Firm Gets Results. Start Today with a Free Consultation.
Leonard Law Group is backed by decades of collective experience in the
field of workers’ compensation. We handle cases for workers of all
industries with professionalism and personal attention. Already with a
firm, but unsure of the quality of your representation? Don’t hesitate
to get a free second opinion from our established workers' compensation
lawyers. We have a reputation throughout Chicago and all of Illinois as
top workers’ compensation attorneys.
Injured on the job? Find out what your legal options are by contacting Leonard Law Group.