Is workman's compensation claimed on taxes?

Workers' compensation is not claimed as income on a tax return as it is fully exempt from taxes according to the IRS. Workers' compensation may be taxable if it reduces Social Security or railroad retirement benefits received, as the portion that is reduced is considered to be Social Security benefits.

The exemption from tax liability for workers' compensation does not apply to any retirement plan benefits received due to length of service, age or prior contribution to the plan, even if the individual retired due to an occupational injury or sickness, states Bankrate. The workers' compensation exemption does apply to the injured or sick individual's survivors as well.