Lost wages: how to calculate them, prove them, and not leave money on the table.

The W-2 calculation

Hourly: hourly rate × missed hours. Salaried: annual salary ÷ 2,080 hours × missed hours. Add overtime you would have worked (proved with the prior 12 weeks of overtime history), bonuses you missed the eligibility window for, commissions tied to client meetings you could not attend, and PTO or sick leave you used.

Documentation that closes objections: (1) pay stubs for the 3 months before and the period after the crash, (2) a letter from HR on letterhead listing dates missed, role, and rate, (3) a copy of the doctor's out-of-work note for the same dates, and (4) prior-year W-2 to establish your base.

The self-employed calculation

Insurers default-discount self-employed lost-income claims because cash-basis income is volatile. The documentation that works:

• The prior three years of personal and business tax returns (Schedule C or K-1).
• Year-to-date profit-and-loss statements, ideally produced by your CPA.
• Calendar of client meetings, jobs, or appointments that were canceled or referred out.
• Emails or texts showing work declined during the recovery period.
• For seasonal businesses, the comparable prior-year period rather than a straight-line monthly average.

Lost earning capacity is a separate, larger claim

Lost wages compensate for time missed. Lost earning capacity compensates for what you can no longer earn going forward because of permanent impairment. The math:

(pre-injury earning capacity − post-injury earning capacity) × remaining worklife years, present-valued

A 40-year-old earning $85,000 with a permanent cervical impairment that reduces her capacity by 20 percent and a remaining worklife of 25 years has a present-value lost-capacity claim well into six figures. This is why vocational and economic experts are routine in permanent-injury cases. The Bureau of Labor Statistics publishes the worklife expectancy tables used to anchor those calculations.

Taxes

Under 26 U.S.C. § 104(a)(2) damages received on account of personal physical injuries are excluded from gross income. That includes the lost wages component when it arises from a physical injury claim. Interest, punitive damages, and any portion allocated to non-physical injury are taxable. Confirm with a CPA.