Is My Workers’ Compensation Taxed in Missouri?

Understand how workers’ compensation works in the state of Missouri.

With some minor exceptions, Missouri workers’ compensation law provides coverage for all workers injured on the job while working within Missouri. The Workers’ Compensation Division of the Missouri Department of Labor and Industrial Relations administers Missouri workers’ compensation law. The most important thing you can do is talk to a Workers’ Compensation attorney call Northland Injury Law at 816-400-4878.

Is My Workers’ Compensation Taxed?

Under Missouri law, workers’ compensation benefits are tax-free at both the state and federal level and do not need to be reported as income on your tax return. However, a tax complication can arise when you receive both workers’ compensation and Social Security Disability Insurance (SSDI) at the same time: federal law generally limits your combined benefits to no more than 80% of your average pre-injury earnings, and if your workers’ compensation payments cause the Social Security Administration to reduce your SSDI, that offset amount may be treated as taxable Social Security income by the IRS. Additionally, a lump-sum workers’ compensation settlement is fully exempt from income tax — including both the lost wages portion and the medical expenses portion — as long as it is paid under a workers’ compensation act. A limited exception may arise if the settlement triggers a reduction in SSDI benefits, in which case the offset amount may be treated as taxable Social Security income. Because these rules involve complex federal and state calculations, speaking with a workers’ compensation attorney can help you understand your specific tax exposure.

Talk to an Attorney

A Missouri attorney experienced in workers’ compensation can be an invaluable asset to your case, especially if you were seriously injured and cannot go back to work. You should strongly consider talking to a worker’s comp attorney if you need to appeal a denial of your claim and/or your injuries are severe or complex. For a more comprehensive list of all the questions you might have about workers’ compensation, and for a free consultation, please call (816)-400-4878. If you have further questions about your case, do not hesitate to reach out to us by the phone number, through the contact form, or even with the live chat option listed on our site!