Reported Income vs. Earning Capacity
Read moreDetermining a person’s earning capacity is crucial when establishing damages as part of a personal injury or wrongful death lawsuit. However, quantifying earning capacity can be more complicated than one might think. Typically, the starting point is reported income (i.e. the income reported on a tax return), but certain factors may exist that could render reported income an inaccurate measure. In these cases, it may be necessary to calculate earning capacity using different methods, or by adjusting reported income. Even for the same individual in the same year, the calculations of reported income and earning capacity can result in much different conclusions, as you will see below.