How is severance pay taxed?

In the agreement they want me to sign they want me to accept all tax liability. If it's considered income shouldn't the corp. pay normal payroll taxes and insurances?
How do you get an agreement reviewed without spending more money than the severance pay?

1 answer  |  asked Jan 19, 2010 3:39 PM [EST]  |  applies to Illinois

Answers (1)

Kristen Prinz
I would have to see your agreement to give you a thorough answer, but in some circumstances, an employer will pay severance through payroll and both the employee and employer will pay their share of payroll taxes and FICA, but the employer may also protect itself by including a provision that the employee accepts all tax liability if there are any shortages. There are other reasons for including a tax liability provision so have your agreement reviewed to be sure.
To get an agreement reviewed without spending more than the severance, ask for a flat fee review. My office offers this option and many other attorneys do as well.

posted by Kristen Prinz  |  Jan 20, 2010 07:43 AM [EST]

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