They took out 1/3 of my check for taxes!!!! This is ridiculous. They really know how to give you a stiff 1 for the holidays.
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The new tax package included a flat 22% tax rate for severance payout. Please consult IRS.gov.
Do they take out 401K contributions from severance?
The more you gross the more they take because of the higher tax bracket (%) it pushes you in to. This is quite legal. That was the point I made weeks ago, you are grossing 15 weeks into 1 check, then yes expect 20-30% to be taken in taxes. Once you get your layoff notice, go in to HR Direct and INCREASE the number of exemptions you are taking. Remember 0 exemption (which is what I claim) takes the maximum tax out of your paycheck. Most people claim 1....get a W4 worksheet and work it up to see how many exemptions/allowances you can legally take and change your exemption to that number so your taxes won't be so devastating. Also, remove and $ amounts that you have direct deposited into other accounts (savings, money markets, etc).
It all adds up, 25% federal for supplemental, plus medicare taxes,ss, then add on your state taxes, quickly gets to 30+% for taxes. Have an issue talk to Fed government, and no I’m not from hr, just been there and see the huge tax impact.
I will use random numbers just to help you understand.
If my wages are $100 I'd normally get maybe $8.5-10 taken out. I have 3 dependents. The taxes taken from the severance was more like 35-40%. So I would have recieved a deposit of around $62 from severance pay with about $38 taken out for taxes.
These numbers are just used as an example.
Should have changed your tax exemptions. They told us severance would be taxed at the supplemental rates.
If it’s a lump sum they likely taxed it at the supplemental rate. Which is generally higher than your typical taxed rate.
I am not understanding. So what percentage of your entire paycheck went to taxes then? 50? More? 1/3 to taxes seems normal. What was the normal take out?
That just isn't right! It may be legal... but just wrong