What to do if I was laid off this week and now my former place of employment is trying to tax my severance package as a bonus?

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What to do if I was laid off this week and now my former place of employment is trying to tax my severance package as a bonus?

It would tax this money at 42% instead of the normal tax bracket. Can it do this?

Asked on April 23, 2012 under Employment Labor Law, California

Answers:

Hong Shen / Roberts Law Group

Answered 9 years ago | Contributor

Severance package is still considered income and you should pay income taxes. However, it should be taxed at your regular tax rate. You should ask why the 42%. You would eventually get the money back when you file tax return next year.


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