Being taxed on workmans comp. checks.

[fflujan]

Hello everyone, tax time is coming and need help regarding my taxes. I'm a fireman that got hurt on the job. I've been off since june of 08. thankfully i've been getting paid like i was still there except for the overtime i get due to (FSLA). I'am also getting taxed on my check. I've been told by many that money earned on workmans comp should be tax free. Is this correct? Am I a different exception? I also know that at the time i recieve my W-2 i will be getting an additional letter from the city stating that i made so much in 2008 while on workmans comp./disability. It also states that due to their system restrictions and IRS requirements, automatic data processing is unable to list my disability pay seperately on my W-2. I was told i need to adjust my taxes according to what the city's letter states. I dont want to do anything illegal so any information is great. Thank you.

 

[Michael Wechsler]

My understanding is that workers' compensation benefits are usually non-taxable. Indirectly that income may subject you to tax. (FLSA?) Part of your workers compensation benefits may reduce social security income and my understanding is that this portion of your social security income reduction may still be considered social security income and taxable.