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I was disabled in a auto accident I receive attendant care. Do I have to pay taxes?

Lake Orion, MI |

Several family members provide attendant care services for me and I just pay for the services out of the money that is issued from the insurance company. This year was the first time I have ever received a 1099. I Received a letter today from the insurance company stating that they do not have the correct information for me and that they needed me to fill out a W9, I'm very hesitant because I'm disabled and I don't want it to look as if I'm working. I appreciate all the help I can get. I know the insurance company will take advantage of you.

Attorney Answers 5

Posted

The insurance company argument for why a 1099 is appropriate for people who recover attendant care is that this is ordinary income for work performed and therefore clearly taxable. I have spoken to tax experts on both sides of the issue. There is a case, Hatcher v. State Farm, 269 Mich App 596 (2005) that reached the exact opposite conclusion with regard to attendant care, stating that the right to benefits belongs to you as the injured person and therefore your insurance company should pay you the benefits directly and it is your subsequent responsibility to issue 1099s to your care providers. The money received by the providers is taxable as income on their returns, not yours.
All of this is within the context of the documentation and support for people who receive attendant care benefits is being significantly tightened and you need to be extremely careful to comply. I am attaching a link to a recent Michigan Supreme Court case that discusses these new requirements: http://www.michiganautolaw.com/auto-lawyers-blog/2012/10/04/supreme-court-issues-new-attendant-care-rules/
My best advice: talk to the lawyer who originally helped you to review your documentation and submittals and to refer you to a tax expert for you to talk with. There is no clear-cut answer, as of today, on the 1099 issue and there is a significant conflict of opinions.

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5 comments

Asker

Posted

Thank you so much Steve, I know how busy you are. Your father was my first attorney when I first had the accident he's awesome!!!! Years later I had to go after the insurance company to receive my attendant care benefits. The attorney that was recommended was at first receiving the payments and taking a third, then one day his secretary called and said for me to submitt the forms myself. Could you pls recommend a tax consultant that will be patient with me, I do have a tbi. Thank you in advance.

Steven M. Gursten

Steven M. Gursten

Posted

wow. what a small world! Happy to help. I'm not sure he would want me to put his name and phone number on a public domain, would you mind calling me at 248-353-7575 and I will be happy to give you the name of someone who can help.

Asker

Posted

Hi Steve I did call and leave a message on your voice mail at your office. I'm anxiously awaiting your call thanks again for all your help. I would recommend your law firm to anyone I come in contact with and I always do. Your father was the most compassionate and kind person I have ever met. He really care about my well-being. I know if it was not for him I would not still be getting benefits 11 years after my accident. Again I can never thank your law firm enough you guys are awesome. I have to also say that your law firm has some of the greatest. Paralegals in the world they're just as compassionate and caring and thorough as the attorney. Thank you again

Steven M. Gursten

Steven M. Gursten

Posted

Thanks. Finishing up deposition now and should be back in my office no later than 3 today. You will be my first return call when I get back. Talk soon. Looking forward to talking with you.

Daniel J. Melican

Daniel J. Melican

Posted

Consult a No-Fault expert.

Posted

If you are providing attendant care services then the insurance company may 1099 you. Some insurance companies do this and some do not. Legally, you are supposed to fill out the W9 if you have been providing attendant care and receiving payments. The person preforming the attendant care is responsible for paying taxes on the income received. Attendant care as you probably know is nursing services and it is considered income. Good luck.

You should consult an attorney in your State at once. This response does not constitute legal advise outside the State Of Michigan and is not intended to establish an attorney-client relationship with our offices. It is for informational use only of the general laws in the State of Michigan, only. To retain our offices, you need to sign a contingency contract with us. We do offer free consultations and we can refer clients to lawyers in your State if you call us. Visit our webpage and tell us what you think. www.schnitzerlaw.net

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1 comment

Daniel J. Melican

Daniel J. Melican

Posted

Consult a No-Fault expert.

Posted

You're recieving funds from the insurance company and they're clearly intending to issue you a 1099. You're expending these funds to cover expenses so it may be possible to offset the 1099 income with the expenses incurred. But no matter how you handle it, you should report the information properly on your tax return - otherwise there will be a mismatch of the information you report and the information the insurance company reports to the IRS...that's the material for audits. Make sure your taxes are prepared properly please and you'll avoid the hassle.

Evan A. Nielsen is licensed to practice law in California. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.

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Posted

I suggest you contact the attorney who handled your legal claim and secured the insurance Company payments for you. I am sure the attorney will be glad to discuss this issue with you.

Legal Disclaimer:

If this information has been helpful, please indicate below.

Mr. Lundeen is licensed to practice law in Florida and Vermont. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Lundeen strongly advises the questioner to confer with an attorney in your state in order to ensure proper advice is received. .

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Posted

You may need a no-fault attorney to deal with the insurance company in regard to your not having to fill out the forms mailed to you. It would seem that the persons you compensate would have to pay taxes not you.

Always consult an attorney IMMEDIATELY as there are time limitations on filing a lawsuit.

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