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Yes. The government looks at a paycheck that’s huge as your new income level. And taxes you appropriately. When you file and the entire years taxable income is tallied, your rate should be tallied with that sum and you will probably see a refund
Thanks guys. ...it wasn't even a huge lump sum. Only 3 weeks of pay (I'm a Jr). I would think it would be taxed like my regular pay check. But HR said they tax more. 46% is just crazy when you get laid off and have bills and rent to pay. Doesn't really make sense.
Seems to be taxed like a bonus which doesn’t seem right but I’ve heard of that happening. Usually it’s taxed like pay. I’d ask someone what’s up
...But hopefully will see that refund
That's odd I thought the highest tax bracket was 39% and that's for $400k+. How did they get to 46?
No that is not correct. Severance should not be taxed like a bonus. As different rules. You can ask for it to be changed.
That's not something you should crowd source but a simple Google search will produce multiple reputable info sources. Severance is not the same as regular wages because it's not for services rendered but it's definitely taxed and exactly how depends on a bunch of little things too long to list
Thanks all! I did do some research and read a bunch of articles (including the one above). Many of them kept noting 25% as an example so that's why I was concerned. I may reach out to hr again, otherwise I hope I see it back in my refund! Thanks again!
I was thinking the same thing when I got my severance payment. But then I forgot to look into it. Glad you posted this.
That’s fucked up. I’m sorry. You’ll make it!
8% NY, 2% NYC, 36% Fed.
Here's a more detailed one. But as someone also said, it's all going to sort itself out when you file your taxes..
https://budgeting.thenest.com/us-tax-laws-severance-pay-26975.html
Basically multiply your severance check by 52 and whatever that “salary” it is the bracket you’re taxed in for that paycheck. Like others said, you’ll get the difference back when you file your taxes because you’re still actually in the lower bracket