- 4 - In the notice of deficiency, respondent determined that a portion of the SSDI benefits (including the amount offset by petitioner’s worker’s compensation benefits) are includable in petitioners’ income. Other adjustments made in the notice of deficiency are not in dispute. Discussion Worker’s compensation benefits are generally excluded from the recipient taxpayer’s gross income. Sec. 104(a)(1). Social Security benefits, including SSDI benefits, are includable in the recipient taxpayer’s income in accordance with a formula that takes into account a variety of factors, including the amount of Social Security benefits received by the taxpayer and the taxpayer’s filing status. See sec. 86. If a taxpayer’s Social Security benefits are reduced by amounts received under a worker’s compensation act, then, for Federal income tax purposes, the worker’s compensation benefits are treated as Social Security benefits. See sec. 86(d)(3)1; Mikalonis v. Commissioner, T.C. 1 Sec. 86(d)(3) provides: SEC. 86(d)(3). Workmen’s Compensation Benefits Substituted for Social Security Benefits.--For purposes of this section, if, by reason of sec. 224 of the Social Security Act (or by reason of sec. 3(a)(1) of the Railroad Retirement Act of 1974), 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.Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011