While we get a lot of questions surrounding workers compensation and taxes, here at Martin Law. We also get our fair share of Social Security tax questions, as well as some about collecting benefits with workers compensation at the same time. So we’re here to help…
Is Social Security Disability Income Taxable?
Yes. Even if you are receiving non-taxable worker’s compensation simultaneously, you need to pay taxes on the Social Security Disability that you would have received irrespective of the workers’ compensation benefit. If you have further questions about this or similar scenarios relating to offsets, you should consult with a tax specialist.
Can I collect Social Security Disability and workers’ compensation simultaneously?
Yes and no. You can receive both types of benefits if you are eligible, with one caveat. Social Security may reduce your monthly payments to prevent you from earning more than 80 percent of your previous earnings. This is called an offset.
Social Security bases the offset on your average current earnings, which is typically the highest of;
- The average monthly wage on which your disability benefits are based
- The average monthly wage during your five best paid years
- The average earnings during your highest paid year of the last five years
Some workers’ compensation cases end with a lump sum settlement rather than ongoing payments. In those cases, an experienced attorney can explain how your workers’ compensation offset may work.
Can I collect Unemployment Benefits at the same time as Social Security Disability and Workers Comp Benefits?
Yes, if you are eligible. However, be aware that for all workers injured after June 24, 1996 there will be a reduction in your workers’ compensation benefits, which are based upon the other benefits you are receiving.
Again, yes, if you are eligible. You can collect other benefits such as unemployment and social security disability while collecting workers compensation.