IOWA REFRESHER: INJURED WORKERS 65 OR OLDER ON DATE OF INJURY ENTITLED TO ADDITIONAL EXEMPTION
During tax season, everyone is looking to maximize their tax deductions. As a refresher, pursuant to the Internal Revenue Code, you are allowed an additional tax deduction if you are not itemizing and age 65 or older at the end of the tax year¹. You are considered to be 65 on the day before your 65th birthday.²
The appropriate compensation rate due a workers’ compensation claimant is controlled by his “weekly spendable earnings.” Iowa Code section 85.37. Weekly spendable earnings “is that amount remaining after payroll taxes are deducted from gross weekly earnings.” Iowa Code section 85.61(9). The appropriate amount to deduct for payroll taxes is determined “as though the employee had elected to claim the maximum number of exemptions for actual dependency, blindness and old age to which the employee is entitled on the date on which he was injured.” Iowa Code Section 85.61(6)(a) (Emphasis added.)Haska Hodzic, Claimant, FILE NUMBER: 5028889, 2012 WL 989613, at *1 (Mar. 21, 2012)
The number of exemptions used when determining the rate of compensation is based upon the exemptions to which the person is actually entitled to claim on their income tax return. Keeling v. Cedar Rapids Community School, File No. 891809 (App. February 26, 1993). Exemptions are determined at the time of injury. Joan M. Ryals, Claimant, FILE NUMBER: 1231769, 2001 WL 34111012, at *9 (June 18, 2001)
Therefore, if an injured worker is 65 on the date of injury, and claimed an additional tax deduction the year of their injury, they are entitled to an additional tax exemption for purposes of calculating their average weekly wage. For questions regarding average weekly wage, exemptions, and compensation rates in Iowa please contact Iowa Workers’ Compensation attorneys Paul Barta at PBarta@baylorevnen.com and Amanda Phillips at aphillips@baylorevnen.com