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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15747
Experience:  15years with H & R Block. Divisional leader, Instructor
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I'm getting a severance check with a one lump sum payment of

Customer Question

I'm getting a severance check with a one lump sum payment of about 8624.00 and was informed that 25 percent of taxes would be taken out? would changing my W4 help lower the taxes, I could use the money now instead of later
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.


Severance pay is seen as supplemental wages by the IRS.

If supplemental wages are less than $1 million, the employer may generally choose to use either:

- the optional (25 percent) flat rate; or
- an aggregate method

Most employers use the 25% flat rate and changing your W4 would not change the withholding rate unfortunately.

In Revenue Ruling 2008-29, the IRS has provided specific guidance on the proper amount of federal income tax an employer must withhold.

Please advise if you need more information or rating in a positive way is acceptable.

Expert:  Robin D. replied 2 years ago.

If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.