On disability and working

State - Illinois

Three years ago a friend of mine was injured at work and has been receiving disability payments since then. She is still working on a WC settlement. She continues to go to all doctor's appts. Recently she became a financial backer in a business venture and partner; she believes this won't affect her disability payments because she isn't actually working, only investing and checking in at the business once in awhile. Her injury was due to a repetitive action so she feels she can work as long as it is nothing she did at her previous job. This concerns me and was wondering if she is right about all of this. Plus she has used her personal checking account to take care of business needs, such as deposits and bills. I don't know if she should be showing this in her personal acct., it may appear as income only.

Thank you for any help you can give.

Whether or not the insurance company finds out your friend is working depends on whether it is a State agency -- Injured Workers' Fund -- or a private insurance company, such as Wassau, etc. If it is a State-run compensation fund, there might be a chance your friend will "fall through the cracks" and what she is doing will not be noticed. Private insurance companies are tighter with their money and exercise more control. Usually any type of work producing an income, is "working."

However, with the way insurance companies are, I would not be surprised if they found out your friend was "working." That would mean that they would/might proceed against her for commiting fraud. Temporary disability is just that, you are not able and ready to work YET. I am surprised they have not assigned a rehabilitation counselor to her case.

As far as the tax consequences are concerned, I think that under IRS rules, you can classify a small start up "business" as a "hobby" for a couple of years until you start showing a profit, but I am not sure.