I checked your link, and while it is a genuine IRS publication, it is just an IRS audit technique guide, and it was written in 2011.
According to the 2019 IRS Publication 525:
"Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Include the following as ordinary income.
1. Interest on any award.
2. Compensation for lost wages or lost profits in most cases."
Basically, you need to be taxed on these lost wages because you would have paid tax on them anyway had the accident not occurred.
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