I was awarded a State of California worker's compensation disability rating (49%), can I claim it as a negative amount of gross income on my 1040 filing under line 21 ?
State/Country relating to question: California
Consulted with tax preparer.
Hello, Did you receive a 1099 for this?
You cannot claim this as negative income on your 1040 tax return.
there should be a 1099 issued for the disability compensation received from CA
I have never seen this done. I do not understand how money received will be classified as negative income
I am not authorized to advise you to proceed with this, as your tax preparer will be the one to advise you. However I have not seen this done before in my experience.
A 1099 is issued for disability compensation received. This amount is not taxable income but will still need to be reported on your return. .
As I previously state, I was injured on duty, awarded a worker's compensation settlement (no attorney involved). I stipulated to the award and signed it. I was awarded monetary damages and the settlement declared that the injury caused permanent disability of 62%. I have continued to work with no restrictions.
I never received a 1099 because there was no loss time and I never received worker's comp benefits. The State of California Worker's Compensation Board of Appeals awarded me the tary settlement. Food for thought.
Thank you for your time.
Ok, I will opt out of this question so another expert may better assist you on your question. Thank you.
Is anyone going to help me?
HiThank you for using justanswer. Different expert here. I read the IRS code you supplied. I agree that your VA disability payments are not taxable to the IRS.However, since you are not taxed on that income, you may NOT subtract it either. I hope this helps
Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
It is not a VA disability, I was awarded a California Worker's Compensation settlement indicating the injury resulted in a 69% permanent disability. It is the 69 % that I was told could be deducted from gross income, Line 21 when filing 1040.
First, thank you for the accept.I apologize that I termed this VA disability.....I did see that it was workman's comp...and workman's comp is what the IRS code is about. Here's the exact wording from the code: Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include - (1) amounts received under workmen's compensation acts as compensation for personal injuries or sickness;
Since the workman's comp is not taxable income, and shouldn't appear on your 1040, you shouldn't be able to subtract it.
However, if you receive a reporting document for the comp, and that reporting doc forces you to put that amount into income (ex: comp being reported on a W2 or a 1099). then yes..........you may then subtract the amount on line 21. In effect, all you are doing is making the comp non taxable by subtracting it.
Here is the address to the code you mentioned...you will have to copy and paste it into your web browser:
I hope this helps.