If Self-Employed, How is Lost Income Calculated After a Car Accident?
Posted on July 27, 2022 in Money
If you have been in a car accident and suffered injuries, you may be trying to recover compensation from the party at fault or their insurer. However, if you are self-employed, you may feel stressed over how to prove your income and the wages you will lose while tending to your injuries. If you find yourself in this situation, your first step should be to talk to a car accident lawyer in Ventura at The King Law Firm to understand how your lost wages can be documented in this case. Self-employed car accident victims can prove their lost wages with prior tax returns, 1099s, invoices, bank statements, contracts, and even statements from current clients. These documents can demonstrate the amount of income lost as a result of the accident. Read on to learn more about the specific documents that can help you in proving car accident lost wages when you’re self-employed.
Proving Lost Wages When Self-Employed
If you are self-employed, you may face additional difficulties in proving what wages you have lost from the accident. There are some documents that may help in this regard:
- Tax returns from previous years
- 1099 Forms you may have received from your clients
- Bank statements and online transaction history
- Outstanding, current, or past business invoices
- Deposited checks
- Contracts with clients that mention payments
- Signed documents from clients
- Testimony from clients
These documents are useful in establishing how much you would have made if you had not been injured. They are also useful in showing how much you might be expected to make in the future due to lost earning capacity. It is up to you to prove with a reasonable degree of certainty the lost wages you are claiming.
The better you’ve documented your income, the better your chances of proving your lost wages. If so, you may be spared from asking your clients to give you a sworn statement, which may create an uncomfortable situation.
If you are a freelancer or a self-employed worker, it would be in your best interest to work with an experienced car accident lawyer who will help you establish your lost wages and help you fight to recover your income. If necessary, your lawyer can call upon expert witnesses that can shed light on your expected income.
What is defined as lost income in personal injury cases?
In general terms, lost income does not only include lost wages. Workers can usually recover:
- Regular and overtime pay
- Bonuses and commissions
- Sick leave and vacation time
- Personal days and other benefits, like free meals
However, most of the above items are generally not available to self-employed workers. In this case, your lawyer can fight to help you recover:
- Lost business opportunities
- Loss of client goodwill, particularly when your injuries prevent you from completing a project under a deadline
Your attorney will help you present these items in such a way as to not have them appear speculative but rather with a reasonable degree of certainty. It is not uncommon in a car accident case to award an injured person for lost wages and income.
What if I am earning money under the table?
Income that is made “under the table” is, by its very nature, difficult to trace. As such, it would be extremely challenging to recover it in a personal injury claim after an accident. There is simply no way to prove that you would have earned this money with any degree of certainty.
Additionally, by mentioning this income, you may be opening the door to other legal problems if it was never reported on your tax returns. This may lead to your having to pay back taxes and penalties, and it may even be considered tax evasion since it was never reported to the IRS.
What is the difference between lost income and loss of earning capacity?
Lost income and loss of earning capacity are two different types of damages in a personal injury claim. Lost wages refer to missed income from the time between when the accident took place and an injury award or settlement was received. Loss of earning capacity refers to the victim’s ability to continue making a living after the verdict or the settlement.
To prove loss of earning capacity, your lawyer will produce your medical records as well as a doctor’s note specifying that your ability to work in the future will be impacted by the injuries you sustained during the crash. This is difficult to prove unless your injuries are extremely severe and will lead to a long-term or permanent disability.
Work With a Personal Injury Attorney to Prove Lost Wages
An experienced car accident lawyer will know how to accurately estimate the income you have lost and help you obtain the highest possible amount for your losses, so you focus on overcoming your injuries and recovering your health.
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