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Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3153
Experience:  EA, CEBS - 35 years experience providing financial advice
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I received a lump sum severance pay from my employer, I was

Resolved Question:

I received a lump sum severance pay from my employer, I was laid off, will I receive some of this money back when I file my taxes?
Submitted: 7 years ago.
Category: Tax
Expert:  Bill replied 7 years ago.

It will depend on your tax rate for the year based on your total income, filing status, deductions, and exemptions. Generally, a flat 25% is withdrawn for federal income taxes on supplemental pay such as a lump sum severance payment. So if 25% was withheld and your tax rate was only 15% then you would receive a refund of the difference.

 

The tax brackets are illustrated in the link below based on taxable income after deductions.

 

http://taxes.about.com/od/2009taxes/qt/2009_tax_rates.htm

 

Customer: replied 7 years ago.
Need more info. basic severance I received was $69041.00, also had vacation time which was $10073.80, my employer gave me enhanced 1 mo. severance which was equal to $6276.92, total was 85391.92 my yearly salary was $81594. I am filing head of household I am a widow, my husband passed in 1998. I have to dependent boys.. So my question is will I get some of this money back when I file.. ?
Expert:  Bill replied 7 years ago.

What has been the amount of federal taxes that have been withheld from your pay year to date? Has $166,985.92 ($85391.92 + $81,594) been paid to you year to date or is $81,594 what your salary would have been for the entire year? Do you have any other income such as investment income or unemployment compensation?

 

Customer: replied 7 years ago.
year to date fed withholding is 26881.79 fed only.. not incl. fed/me, fed/oas/ state. $81594.50 would have been my salary for the year if I worked til end of Dec. 09
Customer: replied 7 years ago.
year to date fed withholding is 26881.79 fed only.. not incl. fed/me, fed/oas/ state. $81594.50 would have been my salary for the year if I worked til end of Dec. 09 YTD earnings is 145.015. ytd fed taxable gross is 138,918.85
Expert:  Bill replied 7 years ago.
Based on gross federal income of $138,918 you should receive a refund of approximately $1,100 based on claiming the standard deduction and assuming you have no other income for the year.
Customer: replied 7 years ago.
Sorry, but you mean to tell me that they took over $30k from my severance and I will get back $1100. that does not sound right to me, maybe I'am asking the wrong question.. I cannot see how they can tax me $30k and I get back $1100. Claiming head of household with two dependents.. I think I did not ask the right question
Expert:  Bill replied 7 years ago.

If your gross income is $138,918 then after deductions your taxable income ($119,618) places you into the 28% marginal tax bracket and there may be a small amount of AMT. I plugged the numbers into 2008 tax software to verify. So your refund may be between $1,100 - $2,000.

 

The 2009 tax bracket is in the link below:

 

See the rates for Head of Household - http://taxes.about.com/od/2009taxes/qt/2009_tax_rates.htm

 

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