How Does Workers’ Compensation Benefits Work with Taxes in Massachusetts?
If you are injured on the job, you may be eligible to receive workers’ compensation benefits. These types of benefits enable injured individuals to receive medical care and wage assistance if they are unable to work due to their injuries. Fortunately, workers’ compensation benefits are not considered as taxable income in the State of Massachusetts.
Workers’ compensation benefits are not taxable, and an injured worker should work with an experienced workers’ compensation lawyer to ensure that they are receiving their full benefits. Injured individuals should speak to a skilled attorney to learn more about the correlation between Boston workers’ compensation and taxes.
What Defines a Person’s Average Weekly Wage?
A weekly wage is an average of what the injured worker earned working at the job where they were injured usually during the prior 52 weeks. All earnings that the injured worker received are included, such as his or her regular hourly rate, any shift differentials, overtime, bonuses, or commissions that they received. Also, if an injured worker had a second job, that should be included as well in calculating the average weekly wage. When the injured worker has a second job, the second job is referred to as concurrent employment. The concurrent wages that the injured worker had from job A and job B are all added together.
The average weekly wage is calculated based on the injured worker’s gross or pre-taxed wages, not his or her net wages. If he or she was making $600 or $1000 a week, the average weekly wage is calculated based on those pre-taxed earnings that they received for each week, not the net that they received after taxes were deducted.
The Relationship Between Benefits and Taxes in Boston
Workers’ compensation benefits are non-taxable similar to personal injury settlements. The fact that an injured worker is receiving only a percentage of their pre-injury wages is a reflection by the state legislature when they enacted the workers’ compensation statute. The benefits received are to reflect the net benefits and approximation of the net benefits that an injured worker would have received when he or she was working.
For temporary incapacity benefits, the injured worker receives 60 percent for partial benefits. They receive 60 percent of the difference of his or her pre-accident average weekly wage in his or her earning capacity not to exceed a maximum of 75 percent of his or her temporary incapacity benefits. For permanent total incapacity benefits, he or she receives two-thirds which is roughly 67 percent of his or her average weekly wage.
These percentages and fractions of the injured workers’ average weekly wage are the injured workers’ net benefits. The bottom line to the injured worker is that his or her weekly benefits in the settlement that he or she receives are non-taxable and not even reportable to the Massachusetts Department of Revenue or the Internal Revenue Service. There are no circumstances in which a person’s workers’ compensation benefits will not be considered tax-free. Workers’ compensation benefits are not taxable at least under the current IRS code. To learn more about Boston workers’ compensation and taxes, claimants should speak to a diligent attorney.
Determining Eligibility for Benefits
A knowledgeable attorney in Boston could help if an insurance company has denied or terminated an injured workers’ benefits by claiming that that the injured person was not an employee but rather an independent contractor. Under the Massachusetts workers’ compensation system and case law, the administrative judge is in charge of deciding whether or not the injured worker is entitled to workers’ compensation benefits. If there is a dispute, the judge looks to the actual work arrangement between the injured worker and the alleged employer and not simply job titles or tax arrangements or schemes that the employer utilized to try and work around the workers’ compensation system.
The administrative judge is going to look at things such as the working conditions of the employee, hours, location, and means and method of work. The judge will consider whether or not the injured worker is an employee or an independent contractor by looking at all the facts surrounding that employer relationship. The judge is trying to cut through the different defenses that an unscrupulous employer might try and raise to say that the injured worker was an independent contractor and not entitled to workers’ compensation benefits.
Call to Learn More About Workers’ Compensation and Taxes in Boston
Getting hurt on the job could have many unforeseen consequences. Under the law, eligible individuals may be able to claim workers’ compensation benefits. If your benefits are terminated or reduced by an insurance company, an experienced workers’ compensation lawyer will do what is necessary to file the appropriate claim to either reinstate the benefits or to recover full benefits if the insurance company had reduced them.
Call today to learn how a seasoned attorney could help with understanding the nuances of Boston workers’ compensation and taxes.