My number is pretty good. I am debating taking it. How do they tax the severance? At what rate?
Ty..gl to all
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They are going to withhold a bunch but then you'll get it back when you file. Assuming you don't get a new job asap, and then you'll be glad you were over-withheld, because your next job will certainly be under-withholding since the tax tables don't know you left with a close to (or more than) years pay in advance.
This also applies if youre let go in June.
Bottom line, Go to the IRS site, download the withholding tables, and figure out where you should be withholding-wise (or want to be) by years end, and tell that to your next employer.
And don't think if you owe money you'll be flush with severance and it's no big deal to write a check. Last time I had something like this occur, it turned out that if you are under-withheld by more than 10% of your total tax liability (or $1000 which ever is greater), penalties apply. Maybe the rules have changed, but I doubt it.
As some has said, what really matters is the bill at tax filing, not so much what is taken out at payment time. But in some cases, the problem is that what turns out to be too LITTLE is taken out. I was RIFed in March last year, got 35 weeks severance + lots of vacation (including some banked) and started a new job in April. This, plus my wife's earning, pushed us into a higher tax bracket, and I had to make estimated tax payments each quarter to avoid penalties at filing time. With 60 weeks severance (paid in 2019) this might also be an issue for those that start new jobs early on
Sort of a first world problem, but be aware!
mine was taxed at 39%. But you get a lot of it back the following year when filing taxes.
Cant you go tax exempt?
As a former VZ employee who recently took an offer, the NET after tax on the lump sum + sti was approx. 61%
And it doesn't matter if you are paid throughout the year or in one lump sum what matters is what this payout is classified as, It's not considered normal income. This is all considered supplemental.
It is all taxed at a supplemental rate. 22% federal on the full amount and 9.62% for state if you live in New York. Everything will be taxed at these rates, your buyout, your STI and your accrued vacation whether they are paid in separate checks or together does not matter. But, at the end of the year you probably get a bit of that back. You will also pay ss ins and medicare. For ss if this the total of your payout exceeds the social security income limit than you don't pay on the full amount of your payout.
I have heard that it will be a pretty high tax rate. The rate is even higher when you get it all at one time vs. distributed throughout the year. You might only net 55-60% when you receive the payment. You may get a tax refund when you file your taxes the following and the effective percentage be even higher.
One good thing is that health care premiums won't be deducted from the severance check. Verizon pays the full COBRA.
Regardless of the rate it depends on what your tax bracket and other things are whether you owe or get back money. Take the money and run