I am crunching numbers on the RIF which I expect to receive. Has anyone heard or know if social security and medicare deducted from severance, vacation and/or STI under a RIF scenario?
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The year it hits your taxes depends when you receive the checks. You would be prudent to be prepared for a 2015 impact, just in case.
It will hit 2016 taxes. Right?
Social security tax is capped, depending on your income at something to the first $114k. Medicare and other payroll taxes are not capped.
Depending on your total household income for the year, you may lose part or all of your tax credits if the unused vacation plus severance push you above $143k. That Includes spousal income for a household.
Whatever income you receive in 2015 becomes your gross income. Taxes are based on that. Uncle Sam likes it that way because taxes really go up a lot for higher income brackets. You'll get to see how "unfair" 40%+ really feels like. It's even bigger than that because of the phase outs out several tax deductions you have been using at a lower income level.
All SS, Medicare, and state taxes will be deducted. This might push you into a higher tax bracket too.
About40%
All normal taxes will be deducted from STI and severance. They will also be taxed at higher rates than a normal paycheck. Due to supplemental and incentive.