Many of the maritime workers in Manhattan who have been injured while on the job find that while the maintenance and cure payments they are entitled to receive are helpful, they are often not enough to cover both their injury-related expenses as well as the cost of daily living. Thus, they may be put in a position of needing to seek more compensation. Some employers might offer an advance on a seaman’s wages on top of maintenance and cure payments. While this might seem advantageous, one should consider the implications of accepting such assistance.
Maintenance and cure payments are not taxable given that they are not considered to be income. Some often view advances in the same light. They are seen as up-front monetary gifts provided by an employer. It is for this reason that the website Bizfilings.com lists advances as being among the exceptions to taxable income.
Yet an advance is only non-taxable in certain situations. If a wage advance is offered under the condition of a seaman repaying, it is not taxable (in such a case, it is considered to be more of a loan than an advance). However, according to the American Institute of Professional Bookkeepers, when a salary advance is constructivly received (e.g., its amount counts against a seaman’s future wages), then it is indeed taxable.
Another reason why injured seamen should pause to think before accepting an advance is the impact such a decision might have on future action, If one accepts an advance, that might count against any future compensation he or she receives if he or she is put in the position of having to take his or her employer to court.