How To Calculate Lost Wages After An Accident If You’re Self-Employed

The hardest part for many personal injury victims and their loved ones is the financial crunch they experience in the aftermath of the accident or event that caused the injury. Medical bills are almost always a main contributor to that financial stress, and lost income often plays a big part, as well. Calculating lost income is simpler when you are an employee and get paid a set amount at regular intervals. Sole proprietors, independent contractors, and other self-employed workers, however, have a much more difficult time proving how much they should receive in lost income after an auto accident. 
Work Loss Benefits
Under Michigan’s No-Fault Act, those who are unable to work due to injuries caused by a car accident may receive 85 percent of their gross pay for up to three years after the accident. These are referred to as “work loss benefits” and are paid regardless of fault. Work loss benefits are income from work the victim would have performed if the accident had never taken place. Gross pay generally describes income someone earns before any deductions (like FICA taxes) are taken out. 
Again, this presents an issue for the self-employed, as gross pay can fluctuate quite a bit for contractors. Instead of presenting pay stubs to show how much they are losing in wages, they need to show lost business opportunities. If you are in this situation, the best course of action is to simply gather as much documentation as you can. 
Showing previous years’ tax returns and 1099 forms can be an effective way of showing how much you normally take in during a certain time period. If you had pending contracting agreements or were in the middle of a project when you were injured, be sure to get all the documents related to those activities. Gathering the amounts of past monetary deposits into your company’s bank account could also be useful. If you felt compelled to hire out work to subcontractors, hold on to the invoices. 
The protocol for determining the proper amount of work loss benefits a self-employed worker in Michigan should get is to deduct the business expenses from his or her gross receipts. An employee is eligible for 85 percent of his or her gross pay because work loss benefits are not considered to be taxable income. Depending on your situation, though, you may not be able to take every deduction you claimed on your Schedule C form and apply it to your work loss benefits.
Still, you could be in a tough situation if you took a lot of deductions. The best way for you to get the work loss benefits you deserve as a self-employed person is to consult with a knowledgeable and experienced lawyer. Attorney Carla D. Aikens has years of experience dealing with complex personal injury claims — especially in the context of Michigan’s complicated no-fault law. Ultimately, our focus is on getting justice for you and your family. Call us at 844-835-2993 to schedule a free initial consultation today. 

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