Severance pay taxes?

Do federal, state, and social security taxes have to be taken out of the severance pay?

1 answer  |  asked Jul 27, 2001 12:48 PM [EST]  |  applies to New York

Answers (1)

David M. Lira
Deducting Taxes from Severance Pay

This is really a question that should be directed at a tax attorney. However, my experience is that employers will almost always insist on deducting income and social security taxes from severance payments because of a fear that they will be liable for the taxes if the employee fails to pay, and may face penalties even if the employee reports the income. Now, I have not gone through IRS regulations to see whether this is true, but based on other secondary material the employers may have a genuine basis for concern. Thus, the answer to your question is probably yes.

posted by David M. Lira  |  Jul 31, 2001 4:25 PM [EST]

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