In the mean time, though, is severance pay taxable?
Yes, generally a severance package will be considered fully taxable by the IRS. Many employers will withhold the appropriate taxes for a severance package before cutting you your check. Although the check you end up getting may look smaller than you thought, having the employer withhold the tax due relieves you from figuring it out or having to come up with the money later after the check has been long spent. It’s also easier for you since you are already going through a stressful situation. In a very, very few circumstances (usually involving high level executives) a portion of the severance payment may be considered as compensation in place of a tort claim and would not be taxablel. This is rare. Most workers receive a serverance payment based upon a formula which reflects the number of years the employee worked. Their severance pay will be fully taxable as wage income. For specific legal advice applicable to the facts of your particular situation, you should seek the services of a q
