Injured workers do not need to pay income taxes on their indemnity benefits. That said, if an injured employee goes back to work on light or limited duty, they do have to pay taxes on any wages earned. If an employee settles a workers’ compensation claim, there is generally no tax withholding taken from the settlement.
Overall, workers’ compensation and taxes in Boca Raton can be a difficult issue to confront without legal assistance. Skilled workers compensation attorneys in Boca Raton can confirm that a claimant is not inappropriately taxed. The lawyers at Kogan & DiSalvo lookout for injured parties to ensure that the insurance company and their employer are not taking advantage of hurt employees.
Average Weekly Wage
State law dictates the method for calculating an individual’s average weekly wage. This calculation is based on the employee’s earnings in the 13 weeks immediately preceding their accident. If a claimant works multiple jobs, the earnings from both jobs must be included. The amount of earnings, plus any extra costs added in is the basis for an average weekly wage.
Each week’s pay is added and averaged to arrive at the final average weekly wage. From this point, the injured employee is generally entitled to 66 and 2/3 percent of that average if they are temporarily disabled. It is important to note that these rates are different if the claimant is permanently disabled or able to return to light duty. If an injured worker is unable to work substantially during those 13 weeks, 75 percent of the time or more, the income for a similar employee may be used to determine the average weekly wage.
Weekly Wage and Taxes
Workers’ compensation benefits, which are paid based on the average weekly wages, replace their income after an injury. These benefits are usually only a fraction of the employee’s regular pay, and workers’ comp checks may not have any withholdings, such as retirement and medical costs. The law may not consider settlement checks as taxable income.
However, there are exceptions to these taxation rules when it comes to workers’ compensation benefits. If an injured employee receives disability benefits from a variety of sources, a portion of those payments could be eligible for state and federal taxes. It is important to contact experienced Boca Raton attorneys because these tax issues regarding workers’ comp can be complex.
Misclassification of Employees
Employers may misclassify their employees as independent contractors to save money and to avoid paying them fairly. When a company decides, to have its work performed by employees obtained through third-party labor brokers, these workers may never appear on the company books and are instead listed as independent contractors on the labor broker’s payroll.
By doing this, the company saves money because it is avoiding taxes and costs associated with employees. Because the workers are classified as independent contractors, rather than employees, the company can argue that these workers are not entitled to benefits that they would otherwise be entitled to as employees, such as workers’ compensation, paid sick leave, minimum wage, and overtime pay.
Additionally, there are several factors that a court may evaluate to determine whether a worker should be an employee versus an independent contractor. For example, the right to control is a critical element when making this determination. If someone is an independent contractor, the employer does not have the right to control or direct the means or method of accomplishing work-related results, only the outcome itself.
This means that an independent contractor sets their own hours, may work from home or other locations, and determines how to complete specific jobs. However, employees must adhere to instructions regarding, where, when, and how they are to complete job duties.
The IRS further breaks down the difference between an employee and an independent contractor in evaluating who sets the rules of work. Specifically, the employer may not provide any training for an independent contractor, as they would for an employee.
The workers’ comp attorneys at Kogan & DiSalvo could address these complicated issues and confirm whether a worker is properly classified, ensuring that they are getting the benefits they deserve and are entitled to by their employer.
Contact an Attorney to Discuss Boca Raton Workers’ Comp and Taxes
The dedicated attorney at Kogan & DiSalvo could help you with any challenges that you may face while trying to receive benefits following a workplace accident. A common issue that claimants face is workers’ compensation and taxes in Boca Raton. Fortunately, knowledgeable lawyers could guide you through this process. To learn more, call today.