Severance Pay Income Tax Withholding?
Asked by: tmoran
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?
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 tax withholding on severance pay
- IRS Severance Pay Taxes Rate
- IRS Severance Tax Rate