Final answer:
In most cases, workers' compensation benefits are not included in gross income for tax purposes. However, there are certain situations where workers' compensation benefits may be subject to income tax. It's important to consult with a tax professional or refer to the IRS guidelines for specific information on how workers' compensation benefits should be treated for tax purposes.
Step-by-step explanation:
In most cases, workers' compensation benefits are not included in gross income for tax purposes. Workers' compensation benefits are intended to provide financial support to employees who suffer an injury or illness while on the job, and these benefits are generally not subject to federal income tax.
However, there are certain situations where workers' compensation benefits may be subject to income tax. For example, if the employer pays the employee's regular salary while they are on leave, and the workers' compensation benefits are in addition to that salary, then the benefits may be considered taxable income.
It's important to consult with a tax professional or refer to the IRS guidelines for specific information on how workers' compensation benefits should be treated for tax purposes.