Are Your Maintenance Payments Taxable Income?

Generally, maintenance payments are considered the same as state workers’ compensation payments for purposes of income taxes.  This means that usually you do not have to pay federal income tax on any maintenance payments that you receive during your maritime injury.  However, it is important to check your own state law to determine whether or not you have to pay state income tax on maintenance payments which you may receive from your employer after a maritime injury.

Also, it is very important to note the difference between maintenance payments and advances.  Many advances are actually paid as “wages” by your maritime employer after your injury.  In other words, many employers will simply continue to pay wages to you following your injury even though your employer should legally be categorizing such payments as maintenance.  This has the unfortunate effect of requiring you to pay taxes on such advances, the same as you would if you were receiving regular wages.  So while maintenance payments may not be taxable to you, there is a very good likelihood that advances will be taxable to you especially if they are classified by your employer as wages to you.

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