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USAA is The American Legion's preferred provider of financial services. Offering a range of top-rated financial and insurance products and services. USAA welcomes honorably discharged U.S. military veterans, active-duty troops and qualified family members and descendants of those who have served. USAA contributes funds to American Legion programs when members join through a dedicated channel:
usaa.com/legion or by calling toll-free at 1-877-699-2654.

Financial Questions & Answers

Financial Questions & Answers

Question:

I’m retired, and my income is from a pension and Social Security, from which I take standard deductions for federal income tax. My wife draws workers compensation as her only source of income. Is the workers compensation income tax free? – H.T.

Answer:

According to IRS Publication 17, “amounts you receive as workers’ compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers’ compensation act.” We suggest looking into your favorite tax program to determine how your return will look considering the new situation. If you do that, you’ll have a clear idea of any adjustments that may need to be made to avoid any surprises next April.