As the old adage goes, “…in this world, nothing can be said to be certain but death and taxes.” With this in mind, we are pleased to inform New Jersey’s injured workers that none of the benefits payable to them under our workers’ compensation statute is taxable.
Temporary disability benefits are payable while you are out of work recovering from a work related injury and are paid at 70% of her gross weekly wage. It has the net effect of paying you at an after tax rate. Most workers receive about the same amount of money on temporary disability as they did while working. The exception is a wage earner who makes in excess of $1158/week. The maximum benefit payable to any worker injured in 2012 is $810 per week.
Permanent disability benefits compensate an injured worker if that worker’s injury has a permanent impact on their life and represents a loss of function and a potential loss of earning power. You cannot be taxed on these kinds of losses. See NJSA 54A:6-6.
You need not fear an IRS lien eating up your workers’ compensation award in New Jersey either. However, that does not mean that you are free and clear. After attorney’s fees and costs, New Jersey recognizes a number of liens, including but not limited to: child support arrears (from any state), State disability liens for benefits paid in a contested workers’ compensation cases, Medicaid/Medicare, and private health carriers.
If you have questions about your New Jersey workers’ compensation benefits, please call us for a complimentary consultation today.