Are My Workers’ Compensation Benefits Taxable in Illinois?

 Posted on November 19, 2024 in Workers' Compensation

Most Illinois employers are required by law to carry workers’ compensation insurance. Injured or ill workers can file a claim against those policies and receive specific benefits. Many injured workers want to know if the money they receive through a workers’ comp claim is taxable. An experienced Aurora, IL workers’ compensation attorney from Kinnally Flaherty Krentz Loran Hodge & Masur P.C. can answer your questions during a free consultation.

What Benefits Does Illinois Workers’ Comp Provide?

If you sustain injuries or contract illnesses due to work-related duties, your employer’s workers’ comp policy should cover your medical expenses and a portion of your lost wages. It might include disability benefits as well. Unlike personal injury claims, you do not have to prove that negligence contributed to causing your injury or illness. However, accepting these benefits usually bars you from filing a personal injury claim against your employer, so you cannot receive non-economic damages, such as pain and suffering. Exceptions can apply, such as if:

• Your employer does not have workers’ comp insurance

• Your employer was grossly negligent

• Your employer intentionally caused your illness or injury

• Your employer did not provide the necessary personal protection equipment

• Your employer knowingly required you to use unsafe equipment

In some situations, you may have grounds for a personal injury claim against someone other than your employer. For example, motorists who cause car accidents while you are driving as part of your job duties could be liable for your damages.

Being eligible for workers’ comp benefits or filing a personal injury claim does not mean you will get as much compensation as you deserve. To fully explore all your options for compensation, consult with a skilled lawyer from Kinnally Flaherty Krentz Loran Hodge & Masur P.C.. We have extensive experience handling both kinds of claims successfully.

Do I Have to Pay Taxes on Workers’ Comp Benefits?

Even though you should receive a portion of your lost income as part of your workers’ comp claim, these funds are paid as a benefit rather than wages. Generally, you do not have to pay local, state, or federal taxes on money you receive through a workers’ compensation claim. Some exceptions apply, such as when you collect Social Security Disability benefits in addition to those from workers’ comp or if you return to light-duty work while still drawing workers’ comp benefits.

If you are forced to file a lawsuit against the workers’ comp insurance company and you win, the money you recover is typically not taxable, either. To learn more about the applicable laws and exceptions, schedule a consultation with one of our attorneys.

Schedule a Free Consultation with an Aurora, IL Workers’ Compensation Lawyers

To get the compensation you deserve, you need an effective lawyer from Kinnally Flaherty Krentz Loran Hodge & Masur P.C. representing your best interests. Call us today at 630-907-0909 to discuss your case with one of our knowledgeable Kane County, IL personal injury attorneys.