When an insurance company calculates lost wages on a self-employed person using their tax returns, do they go by the adjusted gross income or by the gross income?

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When an insurance company calculates lost wages on a self-employed person using their tax returns, do they go by the adjusted gross income or by the gross income?

I thought that the adjusted gross income was mainly for tax purposes as this doesn’t reflect what you actually make for the year.

Asked on April 3, 2013 under Personal Injury, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

The point is to make the self-employed person "whole," or put them in the place they'd be but for the loss of income. The gross income would overstate that, since not every dollar of gross--due to business expenses, etc.--ends up in the person's pocket. The adjusted grosws income would much more accurately reflect the lost income, and thus the loss to the person.


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