Wage loss for self-employed persons

Written by Matz Injury Law on .

“How are my no-fault benefits calculated if I am self-employed?”

The Michigan No-Fault Law states that an insured person will receive 85% of his or her gross income for up to three years from the date of the accident, provided that the insurance company agrees that the person is off work due to the accident. It is easy to figure out what 85% of a person’s gross pay is if that person takes home a regular paycheck. But how do the calculations work for people who are self-employed, or who are independent contractors who don’t draw a check from an employer?

The basic rule for self-employed people is that net wage loss is calculated by deducting business expenses from gross income. The amount that is left over is the basis for making the 85% payment. Independent contractors, on the other hand, can apply for work loss benefits based upon their record of earnings for a reasonable time before the accident. They can also present evidence of lost opportunities for work during the time they will be disabled.

A common dilemma that many self-employed people face in no-fault wage loss situations is that the amount of “income” they receive is not significant. It is to the advantage of a small business owner to “expense” as many costs as possible to the business, so that the taxable consequences to the business are favorable, and the personal tax consequences to the owner are minimized. However, the benefit of minimizing personal income for tax purposes becomes a negative when it is time to base no-fault reimbursement on your claimed wages.

Many of these cases come down to a battle between the accountant for the insurance company and the accountant a lawyer hires to examine the books of his or her client. It is important that you have detailed and clear records of your business bookkeeping and accounting if you want to argue with your car insurance company about how much wage loss reimbursement you should receive, if you are self-employed or are an independent contractor.

Source: 105 Mich App 290; 191 Mich App 12

Matz Injury Law

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Matz Injury Law

Matz Injury Law
Steve Matz and his team have been practicing law in Michigan for decades. They’ve logged hundreds of thousands of miles traveling to virtually every county in Michigan’s lower and upper peninsulas, meeting with clients, and doing the work necessary to earn significant settlements on their clients’ behalf.
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The maximum contingency fee permitted by law is actually 33 1/3%. Michigan court rules require that the attorney fee be computed on the net sum recovered after deducting all disbursements properly chargeable to the enforcement of the claim.

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We can charge 22% while virtually all other injury attorneys charge 33 1/3% because we are very, very, good at obtaining results for our clients. 

We do not spend millions of dollars on television ads; instead, we offer a lower fee to all our clients.  We do not have dozens of lower paid associates handling our work. All our clients are represented by Steven and Jared Matz. Steven Matz started the firm in 1977 and since then has dedicated his life to representing injury victims.  Jared joined the firm in 2016 but grew up listening to stories, discussing theories, and generally learning at the dinner table about how to effectively and compassionately represent injury victims. Jared Matz was literally born to represent individuals involved in motor vehicle crashes.

All of our cases are handled on a contingency fee and all our cases are handled at 22%. Whether the case settles or goes through trial, the fee does not change. While our competitors make excuses as to why they charge so much, we are obtaining results for our clients at a lower fee.

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