Your W-2s, 1099, State and Federal Income Tax in Personal Injury Cases
You’re a hard worker. You have been working hard all year, accumulating your paid time-off or your vacation days so you can take that much-deserved vacation. But one day, through no fault of your own, you’re injured by the negligence of another. It may be a car accident, a slip/trip and fall, a bicycle accident, and the list goes on. Unable to get up off your bed, get out of the house, drive your car, or worst yet, admitted into the hospital for days or weeks. What do you do now about your job? Your employer is understanding as much as possible but when does it end? You start using your paid time off, vacation days, and even sick days to cover your loss of income. But, who pays or reimburses you for your loss of income? On the surface, it seems like you didn’t lose anymore, but you did! You lost that paid time off, those paid vacation days, and the paid sick days. You lost that income! Again, who pays? The defendant should. But how do you prove it? You tell the defendant’s insurance adjuster about the loss of income and the amount you were supposed to earn if you were not hurt by his or her insured. The adjuster then demands to see your previous income tax or your W-2s. You realize this is very private information and you don’t want to provide it? So, what do you do? Give up your rightful claim for loss of income. So, what now? Do you have to provide it? The answer is no. The insurance adjuster may tell you that they require it to evaluate your loss of income claim, but the more important thing you should remember is that the law does not require it!
This issue falls directly under the tax privilege. The courts have held that W-2s forms (and 1099 forms) are required to be attached to a taxpayer’s state and federal income tax returns which is considered an integral part of the return and thus, is protected by the privilege against disclosure of income tax returns. Brown v. Superior Court (1977) 71 Cal.App.3d 141, 143. What this means is that your W-2s, 1099, state and federal income tax does not normally have to be produced to prove your loss of income. You can if you want, and there may be circumstances where you might want to. However, generally, under the law, you are not required to do so. There are plenty of other ways you could prove your loss of income. Contact The Law Firm of R. Sam to learn more about Tax in Personal Injury Cases.