What We Do
STEP #1: ESTABLISH INCOME PRIOR TO ACCIDENT
If insured is employed, contact employer for records.
If insured is self-employed, request tax returns for three years prior to the accident.
Compare
STEP #2: DETERMINE DISABILITY PERIOD
If Insured is employed, his or her employer’s records will be all you
will need to determine
length of time insured was unable to work. If insured is self-employed,
tax returns should
be requested along with business records for the year of the accident.
THESE TWO STEPS ESTABLISHED
THE FOLLOWING
1.
Verified Insured was working at the time of accident.
2.
Insured
did not continue to work after the accident.
3.
Was the Insured earning the amount that was being claimed as a loss?
4.
If self-employed, did the business actually suffer a loss?
1.
TIP EMPLOYEE
a.
Bartenders
b.
Waitresses
c. Barbers, Hairdressers, Etc.
From past
experience, many of the above employees are often paid
“under the table”. If that is the case, no loss of income, since the insured
cannot establish employment. Tips
are often not reported. Pertinent tax records should be requested in order to
consider tips as part of the loss. Internal Revenue Service Regulations will
help determine amount of tips earned.
2. SEASONAL EMPLOYEES
a.
Construction Workers
b.
Resort Town Worker
c.
Teachers
d. Landscapers, Lawn Service
By
requesting prior years employment records, a work pattern can be established.
Example: Roofer in January, Wildwood Motel Manager in December, and a Teacher in
July.
3.
FAMILY BUSINESS -
(questions to be answered)
a.
Is insured actually on payroll?
b.
Did the
business hire someone to replace insured?
If
insured was spouse of the owner, many times they are not on the payroll. Loss
cannot be established unless owner replaced spouse with someone.
4. SMALL BUSINESS
a.
Gas
Stations
b.
Grocery
stores, Deli
Employment
records are required even for a small business. Many small businesses do not like to declare employees full
salary, due to the high cost of payroll taxes.
RECORDS TO BE REVIEWED WHEN INSURED IS SELF-EMPLOYED
1. Income Tax Returns for three years prior to the accident.
A self-employed individual’s net profit is equivalent
to a wage earner’s gross wages. My experience with self-employed individuals,
is that usually their tax returns show an understated profit, which may work to
your advantage.
2. Income tax
Return for the year of the accident as well as the disability period.
A comparison study can be made of the net profit in the
year of the accident with the three years prior. Did the business decrease?
Did the business close? If the business stayed open, was there
replacement wages paid?
3. Business
records for the year of the accident.
Compare records before and after accident.
SERVICE BUSINESS VS. SALES BUSINESS
If the owner deals in a service, normally business will
suffer if the owner is out. This is not the case if the Insured owns a retail or
wholesale business. The loss then may be for replacement wages rather than
owner’s net profit.
RECORDS TO BE REVIEWED WHEN INSURED HAS A BUSINESS PARTNER
If the Insured is part owner of a business, partnership
income tax returns as well as partnership business records need to be review.
Need to determine the insured’s owner percentage of the business in
order to establish his or her actual loss of income.
RECORDS
TO BE REVIEWED WHEN INSURED IS A CORPORATE OFFICER
In addition
to the loss of income from the net profit, if the Insured is a corporate
officer/stockholder of a corporation he or she may receive gross wages like any
other employee. Keep in mind that
this person has control of the books to take himself/herself off the payroll.
Need to review corporation books to determine whether or not he or she is
receiving money under a different account.
If you have any questions regarding this information, please do not hesitate to contact our office. We appreciate the opportunity to serve you.
William F. Adolph & Co., Inc.
158 Saxer Avenue
Springfield, PA 19064
Phone: (610) 543-1199 (610) 543-5202
Fax:
(610) 543-1701
