Just want to know if those hippocrites(the feds)tax our severance,because I know they don't get taxed!!!
2006-08-30 05:20:50 · 6 answers · asked by bigearl518 1 in Business & Finance ➔ Taxes ➔ Other - Taxes
Yes it will get taxed at the same rate as your regular pay. State and Fed.
2006-08-30 05:23:50 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Tax On Severance Pay
2016-11-08 08:51:21 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The first question is whether that 40% figure is just for federal withholding taxes, or whether that percentage includes FICA, Medicare, and state and local taxes. Since the highest individual tax bracket is still 35%, it's likely that your 40% is made up of several different taxes, and is not just federal withholding. Now, back to the problem of the amount of federal taxes withheld. Your employer has two choices regarding withholding when it comes to one-time payments such as these. They can either withhold at a flat rate of 25%, or they can treat the severance payment as regular wages and compute the withholding tax accordingly. Some companies will give you a choice, but they are under no obligation to do so.
2016-03-17 04:48:14 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes severance pay gets taxed just like your regular pay. It is based off your gross pay. They take out Social Security, Medicare, and Federal Taxes. Depending on your state, you may be subject to state income taxes. To lower your federal and state tax, you can claim more dependents. To do so, ask your former employer for a w-4. However, you are eligible to receive unemployment while receiving severance pay.
2006-09-03 04:13:41 · answer #4 · answered by AprilShowers 1 · 1⤊ 0⤋
If you get the whole severance pay in one fat check, it will be taxed at the highest tax bracket. But you'll get some of it back once you file your taxes assuming you're not actually in the highest tax bracket.
2006-08-31 07:23:58 · answer #5 · answered by dilchien 1 · 0⤊ 1⤋
I believe that it does. Will look for a link for you.
*Edit*
Let me elaborate. It will count as income when you file, but they may or may not actually withhold anything. PAY ATTENTION. You don't want to get a big fat check with nothing withheld, and then forget that you never paid any taxes on it and owe them all at once.
2006-08-30 05:23:10 · answer #6 · answered by Will 4 · 0⤊ 2⤋
Yes. Severance is taxed at the higher rate as bonuses get taxed at appx. 48%. Trust me I know. At my old job I got a bonus and after taxes I got about 52% of the gross amount. The same thing happened when I got my severance pay.
Severance is not salary. It is a one-time lump-sum payment that is not a requirement of any company to pay. It is more of a goodwill pay and hence it is classified under gratuities and bonuses, hence the higher tax rate.
2006-08-30 05:23:27 · answer #7 · answered by CATHOLIC PRIEST!! 4 · 0⤊ 4⤋
Yes it is taxed as wages, if it was paid as wages.
If it is "pain and suffering" then it may not be taxable.
2006-08-30 05:23:14 · answer #8 · answered by WendyD1999 5 · 0⤊ 0⤋