Is Workers’ Comp Taxable in California? 2024

The workers’ compensation laws aim to provide financial relief to injured employees while allowing their employers to operate with greater confidence, shielding them from civil liability for injured workers’ damages suffered in the workplace. When a covered employee suffers any type of injury while working, they are typically covered by their employer’s workers’ compensation insurance policy. Filing a claim for workers’ compensation benefits is like filing any other insurance claim with a few unique considerations, such as the involvement of the claimant’s employer in the process.

It’s natural for any injured worker to have lots of questions and concerns about what they can expect in the workers’ compensation claim filing process. One common question is whether their benefits will be subject to taxation at the state or federal levels. If you plan to file for workers’ compensation benefits, you should be pleased to learn that your benefits are not subject to either form of income taxation as your benefits do not technically qualify as income.

The Workers’ Compensation Act sets strict rules for employers, establishing which employees they must cover with their insurance and how much coverage they require. Workers’ compensation must provide medical expense coverage to injured workers as well as disability benefits to help them manage their finances when they cannot work and earn income because of their injuries.

How an Attorney Can Help With a Workers’ Compensation Claim

A work injury can be a life-changing experience that imposes several economic challenges on the victim and their family. The victim could require not only expensive medical care but also face further financial strain because of the inability to work while they recover. Time is a crucial consideration when it comes to filing a claim for workers’ compensation benefits as well. While the state enforces a one-year statute of limitations on workers’ compensation claims, it is always preferable to file a claim as soon as possible to have the greatest chance of success. This prevents the insurance company from casting doubts on the claim because of the time it took the claimant to file it.

Your workers’ compensation attorney can assist you with claim filing and resolve any controversies that might arise throughout the review process. For example, you will have to undergo a medical evaluation from a workers’ compensation physician who will determine your level of disability. Your disability rating determines the amount of benefits you can receive and how long you can continue receiving benefits. If you disagree with the initial assessment, your attorney can help you exercise your right to a second opinion.

While the workers’ compensation laws of California typically prevent injured employees from suing their employers for workplace injuries, there are exceptions to this rule; it is also possible for an injured worker to file a personal injury suit against a third party. Your attorney can advise you as to whether you have other options for legal recourse available to you that may enhance your recovery.

Ultimately, every injured worker will face different challenges in their workers’ compensation claim process, but there is little need to worry about tax implications regarding your benefits as they will not qualify as taxable income. However, a work injury could influence your future employment opportunities and may, in turn, lead to other tax implications later. Your workers’ compensation attorney can provide guidance concerning these issues or refer you to local tax professionals who may be able to assist you.

FAQs About Workers’ Comp Taxable

What Workers’ Compensation Benefits Are Taxable?

Workers’ compensation benefits are not subject to taxation at the state level, nor can these benefits be taxed by the federal government. Workers’ compensation benefits do not qualify as income if the benefits are awarded pursuant to the Workers’ Compensation Act. If you have questions about the potential tax implications of your workers’ compensation benefits determination, an experienced attorney can clarify any such issues for you.

How Much Can I Get in Workers’ Compensation Benefits?

Most injured workers will qualify to have all their medical expenses covered by their employers’ workers’ compensation policies, and this includes immediate and future treatments they need to fully recover. Additionally, claimants can receive disability benefits to reflect diminished capacity to work or inability to work. Benefits may be paid on a partial basis to offset the difference in their income if they can still work but cannot earn as much as they did prior to their injury, or the claimant may receive total disability benefits for 104 weeks or until they are able to return to work. These benefits are generally paid at a rate of about 67% of the average the claimant earns weekly.

Which Workers Are Exempt From Workers’ Compensation?

The state requires almost every private employer in the state to cover their employees with workers’ compensation insurance. A few types of workers are exempt, including independent contractors, sole proprietors, and business owners, aside from roofers. If you are unsure whether you require workers’ compensation insurance, you should consult an experienced attorney to avoid incurring penalties and civil liabilities for lack of required coverage.

Do I Need an Attorney to Obtain Workers’ Compensation Benefits?

It is possible to file your own workers’ compensation claim without hiring an attorney. There is no law that requires you to have legal representation for this claim process. However, an experienced attorney can streamline your claim significantly, shortening the time it will take you to obtain the benefits you need to recover. You will be prepared to resolve any disputes that arise over your claim, and your attorney can help you pursue further legal recourse to enhance your recovery if you have grounds to do so.

Contact Canlas Law Group

The Canlas Law Group can help resolve any issues you may have with your impending workers’ compensation claim. If you were injured at work, you have the right to benefits that can help you recover, but the process of claiming those benefits may be more challenging than you initially expected. Contact us today to schedule a consultation and learn how an experienced workers’ compensation attorney can help with your claim.