Workers Comp Income

[Ochumare]

Hi Guys,   Thanks in advance for the help!     First time having this experience (Workers Comp) - I have a client that all his income for 2021 came from workers comp.   He has not received any official form/ document from that agency.  Says he called asking for a form and was told he does not need one as that income is not taxable.  Please help, as that does not make sense to me.  I am sure it has to be reported whether taxable or not; again I am not really sure.   Pls advise what form #  (if any) is used to report this income so I can come back to my client and have him ask for it.   Also any inside on this process will be greatly appreciated as I have never dealt with this situation.    Thanks again

[Jim-from-Ohio · Accepted solution]

workers comp benefits = not taxable

[Norman2001]

From https://www.irs.gov/publications/p525#en_US_2021_publink1000229331

Workers' Compensation

Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they're paid under a workers' compensation act or a statute in the nature of a workers' compensation act. The exemption also applies to your survivors. The exemption, however, doesn't apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury.

[Ochumare]

Thanks Norman, so much appreciate it.   So, we all agree income is non taxable....   Should tax payer receive a document or form stating total amount of "non taxable" benefits/amount received?   What do I use to report on his tax return?   Nothing?   as if he never received any money?   That is the part I am confused

[Ochumare]

So, we all agree income is non taxable....

Should tax payer receive a document or form stating total amount of "non taxable" benefits/amount received?   What do I use to report on his tax return? Nothing? as if he never received any money? That is the part I am confused.   Thanks in advance

[Norman2001]

In Texas, no form is issued; so there is nothing to enter on the tax return. Your State might be different. You could contact them or visit their website to see if they issue a form. 

[jeffmcpa2010]

NO. 

[Ochumare]

Thanks Norman,  We are in Florida and will check to see if our state issues a form.   Much appreciate all your help.

[jeffmcpa2010]

There is no IRS spproved form (like W-2 or 1099) for reporting non-taxable income.

Most payor's at sometime send some correspondence, but it is not in the form of an "approved form" as it is unnecessary.

You can call the state if you want to, but you are burning up time which you could use being productive.

[Ochumare]

Thanks for the great information.  Just trying to learn so I know how to deal with similar situation in the future.

So then just to clarify and over kill...   lol    I do not report any income in this client's return?  Correct?

[jeffmcpa2010]

Dude

Your question has been answered about 43 times. You clearly do not believe any of the opinions you are receiving here. 

Do what ever you wish.

[dkh]

If I'm not mistaken - Jeff just yelled.  

[jeffmcpa2010]

lol

[IRonMaN]

I think he is just a little grumpy because his recycling bin is overflowing today and it is making a mess in his utility room.

[jeffmcpa2010]

Well in my defense, If It had been more than one 2 letter word, like a whole paragraph or page, I would have noticed I had the caps lock on.