Strike and lockout benefits paid out of regular union dues are taxable as wages unless the payment qualifies as a gift, as discussed below. However, if you have made voluntary contributions to a strike fund, benefits you receive from the fund are tax free up to the amount of your contributions and are taxable to the extent they exceed your contributions.
Here are factors indicating that benefits are gifts: Payments are based on individual need; they are paid to both union and non-union members; and no conditions are imposed on the strikers who receive benefits.
If you receive benefits under conditions by which you are to participate in the strike and the payments are tied to your scale of wages, the benefits are taxable.
Pay penalties charged to striking teachers are not deductible. State law may prohibit public school teachers from striking and charge a penalty equal to one day’s pay for each day spent on strike. For example, when striking teachers returned to work after a one-week strike, a penalty of one week’s salary was deducted from their pay. Although they did not actually receive pay for the week they worked after the strike, they earned taxable wages. Furthermore, the penalty is not deductible. No deduction is allowed for a fine or penalty paid to a government for the violation of a law.
3.129.20.133