Two-dimensional finite element (FE) models normally assume the laminated core as a non-conductive material, and therefore, the damping effect of the eddy currents is ignored in the field solution. Besides, the use of integrated iron loss models in FE software could result in overestimated eddy current losses at high frequencies if the skin effect is ignored. This paper presents a simple way to accurately predict eddy current losses in laminations with FE analysis. An experimental setup along with the simulation models is used to demonstrate the validity of the method. The utility of this method in loss separation and identification of loss coefficients in the presence of skin effect is also illustrated. This method is also applied to a synchronous permanent magnet (PM) machine with sinusoidal current.