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Severance Pay Taxes

Corporate Law Discussions

Severance Pay Taxes

Postby Owen » Wed Dec 07, 2016 7:26 am

s About Taxes)/Severance pay taxes Advertisement Expert: Helen P. O`Planick, EA - 2/1/2009 My job was recently eliminated after working for the company 25 years.  I’m entitled to a severance package and just received my first check in the mail.  This first check also included 2 vacation days in addition to the flat severance amount.  I expected to pay a higher tax percentage as was noted in the agreement and figured it would be somewhere in the range of 27%.  Instead it was a whopping 37%.  Is this correct?  Are Pennsylvania severance pays taxed at a higher rate like bonuses are?  If not, do I have any recourse to have the company lower the amount or do I have to wait to recoup on my 2009 tax returns?
Owen
 
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Joined: Mon Jan 06, 2014 8:23 am

Severance Pay Taxes

Postby marx » Mon Dec 12, 2016 7:33 am

s About Taxes)/Severance pay taxes Advertisement Expert: Helen P. O`Planick, EA - 2/1/2009 My job was recently eliminated after working for the company 25 years.  I’m entitled to a severance package and just received my first check in the mail.  This first check also included 2 vacation days in addition to the flat severance amount.  I expected to pay a higher tax percentage as was noted in the agreement and figured it would be somewhere in the range of 27%.  Instead it was a whopping 37%.  Is this correct?  Are Pennsylvania severance pays taxed at a higher rate like bonuses are?  If not, do I have any recourse to have the company lower the amount or do I have to wait to recoup on my 2009 tax returns?
marx
 
Posts: 46
Joined: Wed May 22, 2013 9:52 am

Severance Pay Taxes

Postby Chase » Tue Dec 13, 2016 1:05 am

Severance can be withheld at a higher rate for federal only(flat rate of btwn 25-28%). PA stays the same percentage as does your local.  

There is nothing you can do unless you are going to work at another job(or have a spouse that is working) and reduce the withholding there.  Or just wait until you file your 2009.

Helen, EA in York, PA
Chase
 
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Joined: Fri Jan 10, 2014 2:56 pm


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