Does Workers Comp Impact Your North Carolina Taxes? 2024

Most workers throughout North Carolina know that workers’ compensation benefits can be an invaluable lifeline when they suffer injuries on the job, but does workers’ comp impact your North Carolina taxes? The answer is somewhat difficult; while workers’ compensation benefits generally do not count as income and are therefore untaxed, other benefits you receive following a work injury may affect your tax obligation in various ways.

Understanding Workers’ Comp Benefits and Taxes in North Carolina

Workers are required to pay taxes on the income they earn. These taxes are often deducted automatically and resolved with income tax filings each year. However, if you are hurt at work and file for workers’ compensation benefits, the benefits you receive are meant to compensate for a loss and do not qualify as income. Therefore, these benefits do not qualify as taxable income, and you do not need to report them on your tax returns.

A workers’ compensation claim in North Carolina will usually yield two forms of benefits from the insurance carrier. First is medical expense coverage. This pays for all of the medical care you need to recover from your work injury. Second is disability benefits paid during the time you are unable to work due to your injury or during the time you can only handle lower-paying work.

Since these disability benefits amount to a percentage of your usual earnings, the tax authorities recognize this, and for the most part, your workers’ compensation benefits are not taxable in North Carolina. There is a caveat to this, however. If you also receive Social Security Disability benefits in addition to workers’ compensation benefits, a portion of these benefits will be taxed. You should discuss your situation with a tax professional to better understand how this works.

Resolving Your Workers’ Compensation Case in North Carolina

While workers’ comp generally does not impact your taxes in North Carolina, resolving a workplace injury can be a very difficult process. You need to work with an experienced attorney to have the easiest time resolving your claim. The right legal representative can help you better understand the process of filing your claim, resolving disputes that arise with your employer or their insurance carrier, and helping you get the benefits you need to recover.

Bridgman Gantt Law Offices has years of professional experience helping North Carolina clients resolve their workers’ compensation cases. We know you are likely to have several questions after an injury at work, and you may not know what to do. We can help ensure your rights are protected and guide you through the process of securing the workers’ compensation benefits you deserve.

If you have questions about your eligibility for Social Security Disability benefits and how they relate to your workers’ compensation settlement and the tax implications, we can address these concerns as well. As soon as you have suffered an injury at work, you need to promptly consult an attorney you can trust. An attorney can help you approach the workers’ compensation claim filing process with peace of mind.

FAQs

Q: Does Workers’ Comp Have to Be Reported to the IRS?

A: No, workers’ comp does not have to be reported to the IRS. Whether you received ongoing disability benefits through your employer’s workers’ compensation insurance policy or you received a lump sum settlement, this does not qualify as income and is, therefore, untaxable. However, if you earned wages during the same year you received benefits, you need to report the income that you earned.

Q: How Long Can You Be on Workers’ Compensation in North Carolina?

A: In North Carolina, you can be on workers’ compensation until you recover enough to return to work. You can continue receiving weekly benefits payments during the time you are unable to work. It is possible to transition to light duty and partial disability benefits if you recover enough to return to work on a limited basis. You must inform the insurance company of any new developments related to your condition to maintain eligibility for disability benefits.

Q: Can I Be Disqualified From Workers’ Compensation Benefits in North Carolina?

A: Yes, it is possible for you to be disqualified from workers’ compensation benefits in North Carolina under certain conditions. For example, if you were working under the influence of drugs or alcohol and caused your own injury, this will likely be a justification to deny your claim for benefits. It is also possible for you to be disqualified if you intentionally violated workplace safety rules or caused your own injury through egregious negligence.

Q: Can I File a Claim Against My Employer for a Work Injury in North Carolina?

A: You generally cannot file a claim against your employer for a work injury in North Carolina. As long as the employer has workers’ compensation insurance as required by law, this typically insulates them from liability for their injured workers’ damages. There are some exceptions to this, however, and it is possible to have grounds for a personal injury claim if a third party is responsible for causing your injury.

Q: Do I Need a Lawyer to File for Workers’ Compensation Benefits?

A: It is possible to file for workers’ compensation benefits without a lawyer, but you are likely to have a much easier time with the process if you have legal representation you can trust on your side. A lawyer can help you complete the filing process, resolve any disputes between you and your employer and/or their insurance carrier, and ensure you receive a fair determination of benefits once your claim is approved.

A Legal Team You Can Trust

The Bridgman Gantt Law Offices can provide comprehensive legal support for your workers’ compensation case in North Carolina. We have helped many clients secure benefits after workplace injuries and can assist with your case. If you have questions about the potential tax implications of a workers’ comp claim or other disability claims following an injury at work, we can help. Contact us today to schedule a consultation with our team and learn how we can help.