Are workers’ compensation benefits taxable in a construction accident case?

In Arkansas, workers’ compensation benefits for a construction accident are generally not taxable. This means that any payments the worker receives as a result of the accident or injuries sustained will generally not be subject to income tax. However, there are exceptions. For instance, any payments made to the victim by a third party in a lawsuit are considered taxable income, so these could be subject to taxes. Additionally, if the worker gets Social Security benefits for their disability due to the accident, then those may also be considered taxable income. If the worker receives benefits for permanent impairment, these benefits may be taxable depending on the specific circumstances. Generally, the worker will have to pay taxes on this money if the impairment is determined to be a physical condition. On the other hand, if the impairment is deemed to be a mental condition, then it is generally not considered taxable income. Lastly, if the worker is awarded a lump sum settlement for the construction accident, then they may be able to deduct a portion of that money from taxes. However, they should speak with an accountant or financial advisor to determine what tax codes they should be following in order to get the most benefit from any settlement. In general, workers’ compensation benefits for construction accidents are generally not taxable in Arkansas. However, there are exceptions to this rule, so it’s important to get advice from a professional to ensure that you are following the right tax codes in order to get the most financial benefit from the accident.

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