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Are My Workers' Compensation Benefits Taxable?

My clients often ask me “Are my workers’ compensation benefits taxable?” The answer is no. You will not receive a 1099 or Form W2 from the insurance company because taxes aren’t due on workers’ compensation benefits or settlements.

However, tax laws do change. So you need to make sure that you consult your tax professional about taxes in any year in which you receive workers’ compensation benefits or a settlement.

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