Let say. No benefits required. Besides tax’s what’s the difference in taking severance lump or regular pay till it ends? When does unused pto get paid out?
Thanks!
10 replies (most recent on top)
Unused PTO gets paid out at the end of your Working/Non-Working period in the amount of unused PTO accumulated up to that date.
- may impact taxes, depends on whether it pushes you into a higher marginal tax bracket
- lose benefits/health insurance
Whether you take lump sum or payments, PTO payout is governed by state/local laws, so check the law in your location.
@be you should able to adjust withholding through an amended W-4 form, however, it’s a little bit more difficult post the TCJA of 2017. Fwiw.
Your health insurance ends if u take a lump sum.
determine if the lump sum this year will put you in a higher tax bracket, however you also need to consider if you will have new income coming in. also, the lump sum will be taxed at I think 22%, which may be higher or lower than the tax rate you end up at end of year. If higher you'll get the difference back come tax time. if lower you'll have to pay the difference come tax time.
Easy to figure out rerun your taxes for this year as if you get a lump sum with no extra taxes taken out . See what your tax bill is and then take it out of the lump sum
@b5 yes. ++ yrs if took payments would put me to April 2025 but lump would be high this yr but then it’s over. Thoughts?
The only other issue is tax brackets . Will the lump sum push you into a higher tax bracket?? This consideration really applies if severance will extend across two tax years
Yep. Unless you have a huge medical bill to pay or high interest loans, I'd stick with the regular biweekly schedule.
Self-discipline to avoid blowing the money before finding a new job comes to mind.