What Is the Difference in Lost Wages vs. Reduced Earning Capability?
If you’ve recently suffered a severe injury, you’re probably facing numerous challenges, including medical bills, pain, and the stress of missing work. One crucial aspect of a personal injury claim is understanding the difference between lost wages and reduced earning capability. Let’s break down these two terms to give you a clear picture of how they apply to your case.
What are lost wages in a personal injury case?
Lost wages refer to the actual income a person loses due to their inability to work due to injuries sustained in an accident. This includes salary, hourly wages, bonuses, commissions, and other income that the injured party would have earned during the recovery period.
What is reduced earning capability?
Reduced earning capability, also known as loss of earning capacity, refers to the decrease in a person’s ability to earn income in the future as a result of the injuries sustained in an accident. This can occur if the injured party has to change careers, work fewer hours, or accept a lower-paying job due to their injuries.
How do you calculate lost wages in a personal injury case?
Lost wages are calculated by determining the total income the injured party would have earned during the period they were unable to work due to their injuries. This may involve reviewing pay stubs, tax returns, and other financial documents, as well as consulting with financial experts.
How do you determine someone’s reduced earning capability?
Reduced earning capability is typically determined by evaluating the injured party’s pre-accident earning capacity and comparing it to their post-accident earning capacity. This may involve considering factors such as the injured party’s age, education, work history, and the severity of the injuries they sustained. In some cases, expert testimony from vocational and economic specialists is necessary to establish the extent of the reduction in earning capacity.
Can I recover compensation for both lost wages and reduced earning capability in a personal injury case?
Yes, it is possible to recover both lost wages and reduced earning capability in a personal injury case, as they are separate losses. Lost wages compensate for the immediate financial losses due to missed work, while reduced earning capability compensates for the long-term impact of the injuries on the individual’s ability to earn a living.
Are lost wages and reduced earning capability taxable?
In the United States, compensation for lost wages in personal injury cases is generally taxable, as it is considered a replacement for taxable income. However, compensation for reduced earning capability is typically not taxable, as it is considered compensation for a non-economic loss. It is essential to consult with a tax professional to understand the specific tax implications of your personal injury award or settlement.
How Our Austin Injury Attorney Can Maximize Your Compensation
The Loewy Law Firm knows how a severe accident can drain your finances, and we will do everything in our power to help you recover fair compensation for your injuries. Some of the ways we can help maximize your compensation include:
- Performing a thorough case evaluation: A personal injury attorney can carefully assess your case to determine the full extent of your lost wages and reduced earning capability, taking into account the specific circumstances of your situation.
- Gathering evidence: Your attorney will gather and organize relevant evidence to support your claim, including pay stubs, tax returns, employment records, and medical documentation.
- Consulting experts: An attorney may consult with vocational and economic experts to assess the impact of your injuries on your long-term earning potential and to provide expert testimony in support of your claim.
- Negotiating with insurance companies: Personal injury attorneys are skilled negotiators who can effectively communicate with insurance companies on your behalf, ensuring that your lost wages and reduced earning capability are accurately and fairly represented in any settlement discussions.
- Litigating in court: If a fair settlement cannot be reached, your attorney can represent you in court, presenting a compelling case for your lost wages and reduced earning capability to a judge or jury.
- Handling appeals: If necessary, your personal injury attorney can handle any appeals that may arise. During the appeal, your lawyer will continue fighting for your right to recover maximum compensation for your lost wages and reduced earning capability.
Let an Austin Personal Injury Lawyer Fight for Your Rights
Navigating the complexities of a personal injury case can be overwhelming, especially when you’re already dealing with the physical and emotional consequences of a severe injury. Let our compassionate and skilled team at the Loewy Law Firm guide you through the process and fight for the compensation you rightfully deserve. Contact us today for a free consultation.