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2 Answers

Severance Pay Income Tax Withholding?

Asked by: tmoran 354 views YA Discussion

I was laid off on November 1st and promised one month of severance. It was not given in a lump sum, instead I received my regularly scheduled salary in direct deposit on Nov. 15th (I normally got paid the 15th and 30th of every month). As can be expected, I received a “final paycheck” via certified mail today, Nov 30th, but the check was for almost half of what my normal paycheck was. I checked everything and the only difference was that my federal income tax rate came out to almost 50%. Is this normal for my situation? I’ve already left a message with my HR rep. but she has not responded yet. Am I missing something? It seems like the normal amount to withhold is 25% and then you recoup the excess in your tax return, so why the 50% income tax rate, especially when the severance was not given as a lump sum and was no more than I normally made?

Thanks!
In response to Quick Answers:
On this check
Gross earnings – $ 1,668.40
Federal Income Tax – $ 795.70
Federal FICA Withheld – $ 70.07
Federal Medicare Withheld – $ 24.19
State Withholding – $ 83.42

Total Withheld – $ 973.38

With all the other deductions it comes out to more than 50%

How others found here:

  • federal withholding tax table for lumpsum for severance
  • Federal income taxablity of severance pay
  • severanve pay withholding

2 Answers



  1. Quick Answers on Dec 01, 2012 Reply

    It’s impossible for withholding for federal to be 50%. The highest tax rate doesn’t even go that high.

    I think you aren’t actually giving us the exact numbers. An irregular check is a flat 25% for federal income tax, plus fica/mc and state. That can add up to 40%, but not 50%.

    HR is correct. If too much was withheld, you’ll get it back when you file. It’s over and done with, so live with it and be prepared to file as soone as you get all of your tax info.

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  2. tro on Dec 01, 2012 Reply

    did you check your other payments, how much was withheld for income tax on those?
    it is my guess that none was withheld on those and they are making up on this one which is not right
    however, when you file your tax return this will mean a greater amount you report as withheld and will probable result in more refund, depending on the rest of your return
    the highest tax rate is 35% and there is no way they could withhold 50% correctly

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