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Ask Dave

Workers Comp Tax Implications?

How does worker's comp effect taxes?

QUESTION: What are the tax implications of a worker’s compensation settlement of $50,000?

ANSWER: Read what Norm Rollins says:

Twenty percent usually comes out for attorney fees.  If it’s worker’s comp just for an injury and not for loss of wages, then it is not taxable.  But if some of it is replacement of lost income, that portion is taxable.  The injury compensation portion is not taxable.
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Taxes Made Easy! 

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