How Lost Income Is Calculated After an Accident
Your lost income goes beyond the dollar amount of your wages. You could be owed a considerable amount for your lost earning capacity if you suffer a long-term disability that prevents you from making as much money as you did before the accident. Using your past wages, age, employment history, education, and physical disabilities, your attorney can help determine the amount you would have made had you continued working to the average retirement age.
Hourly Wage Income Losses
If you work for an employer who pays you by the hour, your wages are the number of hours you missed multiplied by your hourly rate. For example, if your hourly wage is $25 and you were out of work for two weeks, your lost wages would be $25 x (8 hours per day x 10 days) = $2000. Remember that taxes and other deductions do not apply to lost wage claims, so you are owed the gross amount of your earnings.
Annual Salary Income Losses
If you are a salaried worker, wage compensation is based on your pay rate and the number of hours you missed due to the injury. The simplest method is to divide your yearly salary by the number of weekday work hours in a year (2080) and multiply by the number of hours missed due to your injuries. For example, if your yearly salary is $50,000 and you missed two weeks of work, your lost wages would be $50,000 (divided by 2080) x (8 hours x 10 days) = $1923.08 (your total lost wages).
Lost Income for Self-Employed Victims
Since self-employed income is often irregular, earnings for self-employed victims such as independent contractors, sole proprietors, and freelancers can be much more difficult to calculate. You might need to submit tax documents or bank statements to show the dollar amount of earnings or profits you could have made from the accident date to the settlement date.
Other Losses of Income
Depending on the details of the injury, you might be able to recover additional amounts for the following:
- Lost paid time off, such as sick days, vacation days, or other special leave
- Lost overtime payments for periods you regularly work for extra pay or end-of-year bonuses
- Lost opportunities are occasions that would have offered you advancement (such as promotions or job interviews) that you missed due to your injuries
- Lost wage increases are the raises you will never receive due to your early retirement or transition into a different position
- Lost sales commissions if you rely on commissions or tips to supplement your hourly rate
- Lost benefits such as medical, dental, and vision insurance, employee discounts, and other fringe benefits of working for your employer.
What Do I Need to Prove My Income Losses in an Injury Case?
The at-fault party’s insurance company isn’t going to take your word for it when it comes to claiming income losses. You will need extensive documentation to prove your earnings and the amount you could have earned in the future, and even then, the insurance company will likely attempt to settle for much less than the total amount.
Some documents that can support your lost wage claim include the following:
- Pay stubs. You can use copies of your recent pay stubs or employer checks to show how much you should have taken home. If you don’t have a set work schedule, your pay stubs can be used to calculate the average number of hours worked per week.
- Tax forms. Depending on your employment status, you might get a more accurate account of your wages from your most recent tax return, 1099 form, or W-2 form. Self-employed victims might need to show invoices, profit and loss statements, bank statements, or receipts to prove the full extent of their lost income.
- Wage verification form. Your wage verification form is a signed document from your employer verifying your employment, pay rate, and the dates and times you missed work due to your injuries. It might also contain important information for calculating future lost wages such as your position and job title.
- Disability note. If your medical condition prevents you from going back to your previous job or earning a living in the future, you should obtain a doctor's note or disability slip. These forms require a doctor to determine whether the patient is temporarily totally disabled or temporarily partially disabled, as well as how much time you had to take off from work to recover.
Let Our Massachusetts Injury Lawyers Do the Math
It’s more complicated than it looks to calculate the amount of your lost wages, especially if you’ve never filed a personal injury claim before. The experienced personal injury attorneys at Mahaney & Pappas, LLP will help you gather documentation, estimate your damages, and even hire economic experts to get you everything you’re owed for your past and future income losses.
If you have been seriously injured in an accident that was not your fault, please call 508-879-3500 to schedule your complimentary case evaluation. You can also learn more about your rights in our free guide, What You Can Do to Get a Full and Fair Settlement After a Car Accident.