PA Workers’ Comp and Social Security Disability Benefits Can Cause Tax Consequences When Received Together

We have already mentioned on a past blog entry that injured workers in Pennsylvania can collect PA workers’ compensation benefits and Social Security Disability benefits at the same time. However, a recent opinion from the United States Tax Court, reported on, reminds us that the receipt of the two benefit programs together can have unintended tax consequences.

Our firm only handles Pennsylvania workers’ compensation cases; we do not handle tax matters of any kind. Having said that, depending on the spouse’s earnings, if Social Security Disability benefits are being received, workers’ compensation benefits received by an injured worker in PA can be taxable, when ordinarily they would not be taxable. This issue was also addressed recently by the Social Security Administration in a POMS (essentially, a memo). Obviously, this situation changes depending on the circumstances in each case, and the advice of a tax professional should be obtained.

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