No, you do not get a 1099 for workers’ compensation. Payments you receive under a workers’ comp claim are excluded from gross income under federal law, so the insurance carrier or self-insured employer has nothing to report to the IRS and nothing to send you. That holds whether the payment covers lost wages, medical bills, a permanent disability award, or a lump-sum settlement for your injury.
Why the Payments Are Tax-Free
Section 104(a)(1) of the Internal Revenue Code excludes from gross income any amount received under a workers’ compensation act as compensation for personal injuries or sickness.1Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness The exclusion is broad. Weekly temporary disability checks, permanent disability awards, medical reimbursements, and lump-sum settlements all fall inside it. The money is not taxable at the federal level, so it does not appear on your Form 1040 at all.
Why No 1099 Is Issued
The 1099 series exists to tell the IRS about taxable payments. Form 1099-NEC covers nonemployee compensation; Form 1099-MISC covers rents, royalties, prizes, and similar items.2Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information Workers’ comp does not fit any box on either form because it is not taxable income. If you are waiting on a 1099 that never arrives, that silence confirms the tax-free status of your benefits. Nothing goes on your return.
The Narrow Exceptions Where a Tax Form Does Appear
A few situations connected to a workers’ comp claim can still generate a tax document. None of them turn the underlying benefit into taxable income, but each is worth knowing before you file.
Interest on a Delayed Award
If your award was delayed and the payer added interest to the payment, the interest portion is taxable even though the benefit itself is not. The IRS treats interest paid with delayed benefits the same as any other interest income.3Internal Revenue Service. Topic No. 403, Interest Received If the interest reaches $600 or more, the payer should issue a Form 1099-INT. You report the interest regardless of whether the form shows up.
Social Security Disability Offset
If you receive Social Security Disability Insurance alongside workers’ comp, federal law caps the combined monthly total at 80 percent of your average earnings before you became disabled, and the SSA reduces your SSDI check by the excess.4Office of the Law Revision Counsel. 42 USC 424a – Reduction of Disability Benefits5Social Security Administration. How Workers’ Compensation and Other Disability Payments May Affect Your Benefits The workers’ comp payment stays tax-free, but Social Security benefits can be partly taxable depending on your total income. Each January the SSA sends Form SSA-1099 showing your total benefits, with the workers’ comp offset included in Box 3 and the net benefit in Box 5. You use those figures to calculate the taxable portion and report it on lines 6a and 6b of Form 1040.6Internal Revenue Service. Publication 915 – Social Security and Equivalent Railroad Retirement Benefits The tax form here comes from Social Security, not from the workers’ comp payer.
Settlement Amounts Not Tied to Your Physical Injury
A lump-sum settlement paid for your physical injury or sickness stays tax-free in full. In rare cases, a settlement carves out a portion for something unrelated to a physical injury, such as emotional distress with no physical origin, or punitive damages. Any amount allocated to those categories is taxable.7Internal Revenue Service. Tax Implications of Settlements and Judgments Punitive damages are always taxable and go on Schedule 1 as other income.8Internal Revenue Service. IRS Publication 4345 – Settlements – Taxability If any taxable portion exists, the payer may issue a 1099-MISC for that piece.
If a 1099 Shows Up by Mistake
Occasionally a payer issues a 1099 for workers’ comp payments in error. Do not ignore it. The IRS receives a copy of every 1099, and its automated matching system will flag your return if the reported income does not appear.
Contact the payer and ask for a corrected or voided form. If the payer does not cooperate or the issue is still unresolved by the end of February, call the IRS at 800-829-1040 with the payer’s name, address, and phone number, and the IRS will reach out to them.9Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect If you need to file before the correction arrives, report only the income that was actually taxable. You can later amend using Form 1040-X if the corrected numbers differ from what you filed.10Internal Revenue Service. How to File When Taxpayers Have Incorrect or Missing Documents
State Taxes
Federal law sets the baseline. Most states follow the federal exclusion and treat workers’ comp as nontaxable, but treatment of specific scenarios like the SSDI offset or interest on a delayed award can vary. Check your state tax authority if you file a state return, especially when overlapping benefits or a multi-part settlement are involved.