When it comes to Workers’ Compensation Benefits, taxes can get complicated. There are many reasons why it’s so complex.

One reason is that there are many kinds of Workers’ Compensation Benefits. You may receive medical compensation, disability pay, retirement or pension plans. These are only a few examples of Workers’ Compensation Benefits available to you. Each type may or may not have different tax laws that apply to them at the federal or state level.

Another reason is that the identity of your employer also factors into the equation. There is a difference between employment from a private company and the government. Harbor workers, coal miners, and a few other groups are also different. This is because they have a few additional programs that apply to them.

Let’s tackle a few of the more common types of Workers’ Compensation Benefits.

Reimbursement for medical care covers the medical costs of work-related injuries. This is generally not taxable. But, if you get advanced reimbursement for future medical expenses, a tax may apply. If you deducted your medical expense in the previous year, you may receive a tax refund.

Disability pension may have a tax applied to a part of it. If your disability is service-connected, that part of your pension may be exempt from tax. The rest of your pension, based on your years of service, may be taxable.

Death benefits apply if you die due to a work-related illness or injury. In this case, the compensation your family receives is often not taxable.

If this sounds confusing, the best course of action is to obtain the services of a legal professional who specializes in tax law.