Where do I need to claim severance pay?

I have just received a severance package from my employer when my job was terminated. I am in the process of filling out financial aid forms to go back to school. Do I have to claim the severance pay as income? Also are there any other laws regarding where I am obligated/not obligated to claim this income?
Thank you!

1 answer  |  asked Jul 26, 2001 6:41 PM [EST]  |  applies to New York

Answers (1)

David M. Lira
Severance As Income

You should really talk to a tax specialist about this.

From my experience, most payments made under a severance agreement are made in lieu of salary, so that severance payment will almost always be treated just like your regular wages, that is, as ordinary income. You need to treat severance payments as you would salary. Most of the time, employers will make the usual deductions for taxes, and include the severance payment on a W-2 at the end of the year.

posted by David M. Lira  |  Jul 27, 2001 09:55 AM [EST]

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