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Submitted By: someone
Answered: January 16, 2019 8:54 pm
Answered: January 16, 2019 8:54 pm
My company is closing and I’m going to receive a large amount of severance pay. When is this taxable?
Severance pay is taxable in the year in which it is received. If it’s received in a lump sum, then it’s taxable in one year. If it’s spread over two or more years, then the portion received in each year is taxable in that year.
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Tax Glossary
Estimated tax
Advance payment of current tax liability based either on wage withholdings or installment payments of your estimated tax liability. To avoid penalties, you generally must pay to the IRS either 90% of your final tax liability, or either 100% or 110% of the prior year’s tax liability, depending on your adjusted gross income.
