How do I handle Early Retirement – Separation Payouts?
Regardless of the terminology assigned to the payout (e.g. retirement incentive, separation pay, termination pay, etc.) the payout is taxable if the recipient was employed within the City of Solon at the time of retirement. The residence of the individual at the time of the payout has no bearing on the taxability of the payout. Resident taxpayers’ separation payments are considered taxable, regardless of employment location; however, credit is given for taxes lawfully imposed and paid to the city of employment, up to 2%.
