HomeFAQsMaintenance & CureAre maintenance payments taxable? Does maintenance count as income?

Are maintenance payments taxable? Does maintenance count as income?

No, maintenance payments are generally not taxable. These payments are a right given to injured seamen regardless of fault and are not subject to federal taxes. However, seamen should be aware that while maintenance payments are not taxable, any payments they receive labeled as “advances” are.

Filing taxesGenerally, 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.

Defining “Maintenance” Benefits

Maintenance and cure laws, which fall under maritime law, require maritime employers to cover medical and living expenses on any worker injured on the job. These benefits are one of the basic rights granted to seamen under maritime law.

The employer makes these payments to the worker in order to defray the cost of:

  • lodging (rent or mortgage);
  • daily food expenses;
  • transportation; and
  • utilities.

The maritime laws regarding maintenance and cure benefits help sustain injured workers during their convalescence. While a seaman is recovering from the injury or illness, the vessel owner has a legal duty to pay the worker a certain maintenance allowance. The payments should continue until the worker has reached maximum medical improvement or the point at which additional medical treatment will not improve his health condition.

Maintenance payments are historically low. Seamen might receive about $30 per day, which is hardly enough for sustenance. In some instances, the employer and the insurance company might try to limit payouts. If you feel that’s what’s happening in your case, you’ll need to contact an attorney straight away.

Accident Must Be Work-Related

Workers must establish that their injuries occurred while in service of the vessel. Unfortunately, some employers may attempt to argue that the worker’s injuries occurred because of his or her own willful misconduct.

This may be the case if the worker was grossly intoxicated from alcohol not obtained from the employer or if the worker intentionally injured himself or herself. It’s important that maritime employees facing such accusations work with their attorneys to address these issues.

Maintenance Benefits vs. Advances

Maintenance payments aren’t taxable, but one of the ways injured seamen are hurt come tax time is through payments known as “advances.” Sometimes, employers will continue to pay the worker his or her salary while injured and unable to return to work. If these payments are labeled as advances rather than maintenance, they will be subject to taxes.

That’s why it’s important to try to obtain as much maintenance as possible, rather than just accepting advances from an employer.

Complications with Maritime Accidents

In some instances, complications can arise with maritime accidents and necessitate a lawyer’s counsel:

  • employer negligence;
  • having an “unseaworthy” vessel;
  • failure to pay maintenance and cure;
  • wrongful termination because of legal action; or
  • unfair or unreasonable payments.

Should any of these issues arise, or if you feel your employer or its insurance company isn’t handling your accident fairly, contact a maritime attorney as soon as possible to preserve your rights and fight for the benefits to which you’re entitled.

Getting Legal Help after a Maritime Work Accident

If you’re a seaman who has suffered injury, it’s prudent to run your case by an attorney. You may be able to pursue additional compensation through a Jones Act claim or through a third-party maritime claim.

Our attorneys at The Young Firm know how to successfully resolve issues that injured seamen come across. We have the resources necessary to obtain fair compensation for our clients. Contact us today at 504-680-4100 FREE for a free, no-obligation consultation.

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