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Reporting Wages

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  • Pattymd
    replied
    Severance pay is taxable wages for all state and federal withholding taxes unless it qualifies as a Supplemental UI payment. The CSX Corporation has been fighting this battle with the IRS for years, and they (CSX) keep losing.

    For federal tax purposes, see here, specifically, page 13:
    http://www.irs.gov/pub/irs-pdf/p15.pdf

    Severance pay qualifies as "supplemental wages". Note, however, that the supplemental tax rate can only be used if taxes would have been withheld from the regular pay for the same period. Therefore, if the severance pay is paid via continuing payments (like a wage continuation plan), the supplemental rate cannot be used, since there are no regular wages for the same period.

    Most states also have a flat rate for supplemental wages, but a few do not.

    Leave a comment:


  • trulyblssd
    replied
    I guess a better question would be what kind of taxes need to be taken out of severence pay? Is is like a normal check or like a bonus check.

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  • Pattymd
    replied
    Report to whom? Tax agencies? UI Agencies, W-2? Income while on DI or UI? Don't know what you're looking for.

    Leave a comment:


  • trulyblssd
    started a topic Reporting Wages

    Reporting Wages

    Do you have to report wages for a severance pay? Where are some good resources for what needs to be done? Thanks!
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