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Payments to injured railroad workers for wages taxable

Railroad workers in Connecticut might want to know about a recent decision by the U.S. Supreme Court. The nation's highest court ruled on a case concerning whether lost wage payments to injured railroad workers are taxable.

The Railroad Retirement Tax Act is a law that establishes a self-sustaining retirement benefits system for rail workers. The workers contribute to the program through payroll deductions that are similar to Social Security. The case involved a worker for BSNF who was injured on the job. He was awarded a total of $126,212.78 by a jury. Out of that amount, $30,000 was for lost wages.

BSNF asked if it could withhold $3,765 from the $30,000 lost wage payment for taxes. The federal district court and appeals court both found that the lost wage payment did not constitute income for tax purposes. However, the Supreme Court disagreed and found that the payments are similar to payments received from Social Security, which are taxable.

Railroad workers who suffer injuries while they are working on the job can seek compensation under the Federal Employers Liability Act. Railroad worker injuries are not covered by state workers' compensation systems. Workers with FELA claims must be able to show that the railroad's negligence led to their injuries, which is different than workers' compensation. Injured rail workers who suffered injuries while they were working might benefit from seeking help from experienced FELA claims lawyers who are more familiar with the proof requirements and might offer fair assessments of whether the workers might have valid grounds to file claims.

Source: Insurance Journal, "Supreme Court rules railroad's payments to injured workers for lost wages are taxable", Andrew Simpson, March 4, 2019

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