A lot of people earn cash income, and not all of them report it. Housekeepers clean private homes for cash and many other professions, like waitresses, earn tips. When an accident strikes, cash earners often mistakenly assume that they cannot recover their lost income. Sometime they even tell their insurance company that they weren’t working at all.
If you are in an accident you may be able to recover your lost income, even if you work for cash and do not declare the income on your taxes.
Cash income creates problems and requires special attention, but the courts have held that if you can prove your income loss, you can recover it-even if you do not declare your income or pay taxes. Normally, for non-cash paying jobs, income tax returns prove your income and are relied on to be an accurate reflection of your losses. However, income loss can be proved in other ways. One of the best ways is if you keep some sort of record of your earnings – such as marking them on a calendar or always depositing them in a bank account. In other cases employers may be willing to confirm the amount they are paying.
There are some exceptions. For example, if you are in a motor vehicle accident, your insurer does not, by law, have to pay income replacement benefits if the income has not been declared. However, you may still claim your income loss against the at-fault driver.
It is very important be honest about cash income, even if you cannot prove your loss. If an insurance company believes that you are not being honest it may affect what they are willing to pay, even if you are not advancing an income loss claim.
Cash income requires specialized legal advice and we can help you navigate this sometimes complex problem. Give us a call at (416) 533-7133 for a free consultation if you’ve been in an accident and are worried about income replacement.