Yes. Self-employed people can recover lost earnings and lost earning capacity in Texas, but the proof looks different from a paycheck. Texas requires lost earnings to be proved as a net loss after federal income tax, so tax returns, 1099s, invoices, bank records, and often an accountant’s analysis carry the claim.
Texas lets an injured person recover lost earnings and the loss of earning capacity caused by the crash. For employees, a pay stub and an employer letter usually do the work. For contractors, gig workers, small business owners, and commission earners, the claim depends on reconstructing what the person would have earned and showing what they actually lost.
Civil Practice and Remedies Code section 18.091 sets a specific rule: evidence of loss of earnings or earning capacity must be presented as a net loss after reduction for federal income tax payments or unpaid tax liability, and the jury is instructed on whether the recovery is subject to income tax. That means the numbers have to be built carefully from real financial records, not estimated.
The usual evidence includes several years of tax returns, Schedule C or K-1 statements, 1099 forms, invoices and contracts, bank deposits, booking calendars, and records of jobs turned down or cancelled after the crash. An accountant or economist can compare the periods before and after the injury and project future losses if the injury limits the work permanently.
Insurers push back in predictable ways. They point to low reported income on tax returns, seasonal swings, or a business that was already declining. Consistent records and an explanation of the business’s normal pattern answer those arguments. Lost profits of a business can be harder to recover than the owner’s own lost earnings, so the claim should be framed around the person’s earning capacity.
Insurers often ask for more documentation from self-employed claimants than from employees, and the request can feel intrusive. Producing organized records early, rather than piecemeal, makes the claim more credible and avoids months of back-and-forth. A lawyer can limit requests to what is relevant and protect information that is not.
Personal injury protection can bridge the gap early: under the standard Texas policy form it pays a share of lost income regardless of fault. Owsley Law Firm builds self-employed income claims and charges no fee unless it wins.
What to do, step by step
- Gather three or more years of tax returns.
- Collect invoices, contracts, and bank deposits.
- Document cancelled jobs and declined work.
- Keep records of anyone hired to cover your work.
- Ask your doctor to document work restrictions.
Earning capacity can matter more than past earnings. A young business owner whose income was growing, or a skilled tradesperson who can no longer do physical work, may have a loss of earning capacity claim that is larger than the earnings already lost. That claim relies on medical restrictions and expert projections.
Out-of-pocket business costs caused by the injury, such as hiring help to cover jobs, can be part of the proof that the injury cost money.
Timing your claim matters. Settling before the long-term effect on your work is known can leave out the largest part of a self-employed loss. A doctor’s assessment of permanent restrictions and an expert projection of future earnings are often needed before the claim is valued.
Mistakes that cost people money
- Relying only on your own estimate of lost income.
- Not keeping records of jobs you had to turn down.
- Settling before you know your long-term work limits.
- Ignoring the net-of-tax rule in section 18.091.
Related questions
What if I underreported income on my taxes?
Tax returns are usually the starting point, and income not reported can be difficult to recover. Talk to a lawyer before making any claim based on unreported income.
Do gig workers count as self-employed?
Usually yes. Rideshare and delivery drivers typically prove income with app earnings statements and 1099 forms.
Can I recover lost business profits?
Sometimes, but the stronger claim is usually your own lost earnings and earning capacity, proved as a net loss after income tax.
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