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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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My position was eliminated (after 32 years with company)

Customer Question

My position was eliminated (after 32 years with company) effective 2/29/16. My severance agreement provided 8 months' salary continuance, paid biweekly through 6/30 and remainder in lump sum. I just got letter explains the last auto deposit of lump sum which nets to less than 50% of gross final lump sum payment. Shouldn't fed withholding have been 25% instead of considering lump sum as regular wages and applying W4 withholding?
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: I live in appears that state income tax, SS, MEDICARE, etc are all withheld correctly
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 4 months ago.
Category: Tax
Expert:  emc011075 replied 4 months ago.

Hi. My name is ***** ***** I will be happy to help you.

For supplemental payments (bonuses, severance and such) payroll department can choose

- 25% flat rate OR

- aggregate method (using your W4 info).

If the supplemental wages does not exceed 1M, employer can choose one or another. If the amount is over 1M, he must use 35% flat rate.