I knew taxes would be taken out of my severance, but I wasn't prepared for the amount. Over ten thousand dollars disappeared before the payment even reached me. Does anyone know whether some of that can be recovered through a tax refund? I'm trying to figure out how much of the payment I can actually count on.
10 replies (most recent on top)
As @be said, its basically 1/4 to 1/3 taken out in taxes. An easy way to figure out a range of what you'll get is to take the number, divide by 4, then multiply that number by 3, and repeat with the original amount but divide by 3 and multiply by 2. That'll give you the number with 1/4 and 1/3 taken off the top. Your actual payment will be between those numbers.
@f6 isn't very bright. He responded without reading OP's post. To wit: "I knew taxes would be taken out of my severance"
You can use Dinkytown.net 1040 tax calculator to run a quick check on 2026 taxes and get an estimate on refunds.
OP isn't very bright. Income is taxed.
@be Well described.
Yes, I went thru the same situation, it is standard as per tax laws.. Severance pay is a 'wage income', so all the applicable taxes are deducted at the source and reported to IRS, just like your pay check. You will see this tax paid in your W2 for 2026.
When you file the 2026 return, based on your situation ( earnings from rest of the year, filing status etc.) , you may get a refund.
@aw yea for dementia Don's golf outings.
You get the excess withholding back with your tax refund.
Now Tell us how much you got in package 📦 before tax?
Having $10K disappear sounds accurate. The 22% figure is the IRS's optional flat withholding rate for separately identified supplemental wages under $1 million. Social Security and Medicare are another 7.65% and then whatever your state withholds. But remember, that is estimated withholding, not necessarily your ultimate tax liability. When you file your return, the federal portion gets reconciled against your actual annual taxable income, deductions, filing status, credits, etc. You could ultimately get some of that withholding back or owe additional tax. Also was any local earned income tax applied to that severance payout?
Atleast with the current administration you know that the money is going to be spent well