Is severance pay taxable?

Answer

According to Forbes, severance pay is taxable in the year in which the employee receives it. Prior to an employee receiving a severance check, the employer should take out appropriate state and federal taxes. Severance pay is reported on the employee's W-2 form, according to Turbo Tax.

Severance pay may include monies due to an employee as a result of unused vacation or sick days. This alternate type of payment is also considered taxable by the Internal Revenue Service, according to Turbo Tax. The IRS notes that the only portion of severance pay that is not taxable at the time of payment is pay that has already been taxed but has not been distributed to the employee.

Q&A Related to "Is severance pay taxable?"
Severance pay is when a company goes out of business and the employees may get a large sum of money at the end of his employment. The dollar amount is figured out by how long that
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1. File your gross, taxable income on Schedule C of the Internal Revenue Service Form 1040, Line 1. You must track your taxable sales by keeping a bookkeeping or accounting system
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The amount of an individual's annual income on which tax is payable. Here is a link: http://www.finance-glossary.com/define/taxable-pay/1415/0/T.
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n. A sum of money usually based on length of employment for which an employee is eligible upon termination.
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