Every year during the first few months of a new year, this question comes up from clients. The simple answer is “none.”
However, per IRS Publication 525, if you’re on Social Security, and it has been reduced by the amount of workers’ compensation benefits you’re being paid, that amount is likely taxable. However, for the vast majority of injured workers receiving TTD, TPD, or PPD weekly benefits, there will be no tax consequences associated with your workers’ compensation income benefits (or workers’ comp settlements).
You will not get a 1099 or W2 for workers’ comp payments made to you. If you spent 2016 on workers’ comp benefits, or if you settled a workers’ comp case in 2016, this may be the simplest tax form you’ve ever filed!