Q: why do I have to pay taxes on money that I never receive

A: In your situation, it seems like there is a coordination issue between your workers' compensation benefits and your Social Security Disability Insurance (SSDI) benefits. Here's what might be happening:

1. When you receive workers' compensation benefits and SSDI benefits simultaneously, the total amount you receive from both sources cannot exceed 80% of your pre-disability earnings. If it does, your SSDI benefits may be reduced to offset the excess. This is known as the "workers' compensation offset."

2. The Social Security Administration (SSA) may be reporting the amount of SSDI benefits you would have received before the workers' compensation offset on your Form 1099-SSA. This is the amount they consider as part of your taxable income, even if you didn't actually receive the full amount due to the offset.

3. However, you should not be taxed on the portion of your SSDI benefits that you did not actually receive due to the workers' compensation offset. You can report this discrepancy when filing your tax return.

To resolve this issue, you should:

1. Contact the SSA to ensure they have accurate information about your workers' compensation benefits and the offset amount.

2. When filing your tax return, report only the actual amount of SSDI benefits you received, not the amount reported on your Form 1099-SSA. You may need to attach a separate statement explaining the discrepancy and showing the calculation of the taxable portion of your benefits.

3. Consider seeking the assistance of a tax professional who has experience dealing with the interaction between workers' compensation and SSDI benefits to ensure your tax return is prepared correctly.

If the issue persists, you may need to appeal the decision or seek legal advice to ensure you are not being unfairly taxed on benefits you did not receive.