Should You Apply for Social Security Disability While Receiving Worker's Compensation?

June 27,2016
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Bergen County Disability Attorneys Explain Social Security Disability and Worker’s Compensation:

Are you receiving worker’s compensation benefits?  Have you been told that you may be eligible to receive Social Security disability payments from the Social Security Administration in addition to your worker’s comp.?  Here from our Bergen County disability attorneys are the 8 most important things that you should consider before you run down to your local Social Security office and fill out an application.

  1. The fact that you are receiving worker’s compensation benefits does not mean that you are disabled for Social Security disability purposes.

Worker’s compensation requires only that you prove that you are unable to do the job that you had at the time of the injury.  In order to qualify for social security disability, you will have to prove that you are unable to engage in any substantial gainful activity as a result of an impairment that has lasted or is expected to last at least 12 months or is expected to result in death.

  1. Worker’s compensation benefits are not taxable and do not need to be reported on your form 1040.

The Internal Revenue Code, section 104(a)(1), specifically excludes worker’s compensation benefits from income.  You do not need to report these benefits on your tax form 1040.

  1. Social Security disability benefits may be subject to income tax.

Section 86 of the Internal Revenue Code includes a complicated formula for determining how much, if any, of your Social Security benefit is taxable and as such must be included in your gross income.  .

  1. Any Social Security disability payment that you are eligible for may be reduced by the amount of your worker’s compensation benefit.

If the money that you would receive from Social Security and worker’s compensation add up to more than 80% of your monthly average current earnings, your Social Security disability payment will be reduced accordingly, even if the result is that your disability payment will be reduced to zero.  This adjustment is known as the workers’ compensation offset.  The portion of your worker’s compensation benefit equal to the amount of the reduction will be considered as Social Security for tax purposes.

Monthly average current earnings are based on your earnings at the time of and prior to the onset of your injury or other disabling condition.

  1. A determination that you are eligible for SSA while you are receiving workers’ comp may result in a net loss.

Because of the workers’ compensation offset and depending on how much of your Social Security benefit is taxable, an award of Social Security disability benefits while you are receiving workers’ comp may result in an increase in your tax liability that exceeds any money that you actually receive from SSA.

  1. The Social Security Administration will not do the math to let you know ahead of time if you are going to have a financial gain or a loss as a result of being eligible for Social Security disability.

The assistants at the local Social Security office can help you fill out forms and may be able to tell you what information is needed in order to complete your application but they cannot tell you if filing an application will be in your best interest.  For assistance with that decision, you should consult with an attorney experienced in Social Security disability cases.  .

  1. A successful application for Social Security disability can change your previously non taxable worker’s compensation benefits into taxable Social Security benefits.

Worker’s compensation benefits are not taxable.  Social Security benefits may be taxable.  Social Security benefits may be reduced by your receipt of worker’s compensation benefits. The reduction can result in a disability payment of zero dollars.  A portion of your worker’s compensation benefit equal to the amount of the reduction will be treated as Social Security for tax purposes even if the reduction is for to the full amount of your disability benefit.

  1. An attorney experienced in handling Social Security disability claims will know if filing for Social Security disability while receiving worker’s compensation benefits is in your best interest.

Unlike the assistants at the Social Security office, your attorney will look at your complete financial situation before advising you to apply for disability.  The question is not whether or not you can apply.  The SSA will accept your application.  The question isn’t just whether or not you qualify for benefits.  The real question that you want answered is whether or not a successful application will result in more money in your pocket.  A wrong decision can cost you a considerable amount of money.  A correct answer to this question requires an understanding of the ins and outs of both the Social Security Act and the Internal Revenue Code.

Can you apply for Social Security disability while receiving worker’s compensation? Yes you can!

Should you?  The experienced Bergen County disability attorneys at the Hermann Law Group can review the issues in your case and keep you from making a costly mistake!  Call us today at 877-773-3030.