Comprehensive and Detailed Explanation:Workers' compensation benefitsare NOT subject to FUTA (Federal Unemployment Tax Act)as long as they are paid under aworkers' compensation law.
Option A (Not included in gross income) is correctbecauseworkers' compensation is tax-exemptunder IRS rules.
Option B (Received for work-related injuries/illnesses) is correctbecause these paymentsreplace lost wagesdue to job-related incidents.
Option D (Not subject to FICA under state laws) is correctbecauseworkers' compensation payments are exempt from Social Security & Medicare taxesif they are made under astate-approved program.
Option C is incorrectbecause workers' compensation paymentsare NOT subject to FUTA, regardless of the amount paid.
[Reference:, IRS Publication 525 – Taxability of Workers’ Compensation, Payroll.org – Payroll Taxation of Disability and Workers' Compensation Benefits, , ]
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