Wages vs Adjusted Gross Income

Work Comp attorney says Florida goes by the Adjusted Gross Income figure on our 1040 form for him to calculate how much we earned - and thus insurance needs to pay. We believe it should be the Non-employee Compensation figure from our 1099-Misc form. Subcontracting work. Who's right?

Doesn't sound right to me.  You're talking about TTD payments, right?

Adjusted gross income includes all sorts of income and adjustments that have nothing to do with figuring your workers compensation base benefit.  If you got a 1099, that income would have flowed to an earnings from self employment, Schedule C form.  On that form any business related expenses are deducted, and at the end of that form is your net earnings from self employment, which flows onto page 1 of your 1040 form.  That is the amount used to calculate your average weekly wage.

Thank you for such a quick reply. No, I'm talking Permanent Total Disability. It's a long story and I'll try to make it short and to the point. Maybe the bottom line is, can you help us understand what PTD is based upon? The 13-weeks income prior to accident or the Adjusted Gross Income or the Wages Earned as the employer reported on the 1099Misc form? And if based on 13 weeks prior to accident, is date money was earned or date it was paid? Being a contractor, you earn it one day but may not see the paycheck for several weeks or sometimes over a month. If you want the story, here's what happened: Work Comp atty said employer had based TTD on info we gave them for 13 weeks prior to accident to pay TTD. When it came time to pay Permanent, employer said they had different info and realized they had been overpaying us all along. When we went to fight this figure, work comp atty basically said, 'agree to take this lower figure or we'll base it on your Adjusted Gross Income which is W-A-Y lower than what you're getting now from us.' We told him our Adjusted Gross Income was so low because we didn't have to claim work comp as income for that year and yet we also had many deductions. He was saying we didn't claim all our income and we should take what he was offering. He said we could lose everything if we didn't accept what he was offering that very minute. We felt something was better than nothing - but we did NOT lie on the IRS forms.

Thank you for such a quick reply. And I think I follow your reply. If I may, I'd like to ask one more question: Exactly how is PTD figured? The accident occured and we received TTD for 2 years. Then when it came time to pay PTD, work comp atty (and I guess employer) changed their tune. They said they had been overpaying us for 2 years and wanted to now base payment on IRS forms. But naturally during that 2 years, the income reported on IRS form dropped to basically nothing because work compensation is not reported. If we know what PTD is supposed to be based upon, we could hopefully resolve this and you'd never have to hear from me again :-)  Thank you.

Permanent total disability has the same base rate as TTD benefits with a 3% cost of living added in for each year after the accident.  But the TTD rate has to be correctly calculated.

So if your accident was 12/31/08 we would look at you earnings from all employers for the 3 months prior to 12/31/08, so basically 10/1/08 to 12/30/08.  You add the earnings and divided by 13.  This creates a base AWW (average weekly wage).  2/3 of the AWW is your TTD rate.   The law requires that income be reported to the IRS before itcounts as income.  This avoids contractors getting 1099's and not paying taxes, then claimant workers compensation.  But contactors often have expenses affiliated with earing that money so if the 1099 says $4,000 but you reported $2,000 in materials cost, your income would be $2,000.  That's why you have to look at schedule C.

It is the money received during the 13 weeks prior to the accident.  If the work is seasonal or sporadic there are methods to average your earnings.