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Gross income includes "all income from whatever source
derived", unless specifically excluded. Sec. 61(a).
Generally, gross income does not include "amounts received
under workmen's compensation acts as compensation for personal
injuries or sickness." Sec. 104(a)(1).
However, gross income generally includes Social Security
benefits in an amount equal to the lesser of: (1) one-half of
such benefits received during the taxable year, or (2) one-half
of the excess over certain base amounts. Sec. 86(a). The base
amount for taxpayers filing a joint return for taxable year 1992
is $32,000. Sec. 86(c)(2). Section 86(d)(3) provides that if
any Social Security benefit is reduced by reason of the receipt
of a benefit under a workmen's compensation act, the term "social
security benefit" includes that portion of such benefit received
under the workmen's compensation act which equals such reduction.
Section 86 was added by the Social Security Amendments of
1983, Pub. L. 98-21, sec. 121, 97 Stat. 80. The House report
states in relevant part:
Your Committee's bill provides that social security
benefits potentially subject to tax will include any
workmen's compensation whose receipt caused a reduction
in social security disability benefits. For example,
if an individual were entitled to $10,000 of social
security disability benefits but received only $6,000
because of the receipt of $4,000 of workmen's
compensation benefits, then, for purposes of the
provisions taxing social security benefits, the
individual will be considered to have received $10,000
of social security benefits.
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Last modified: May 25, 2011