Long story short, with all the mess of reorganization and downsizing, I opted for EOI in round 3 and accepted.
I tried to follow the timeline below, but CVX still managed to beat me and paid my severance on Jan 6.
Today, I received my pay slip stating that the payment as earning for period 12/16/2020 to 12/31/2020 (non-negotiable)
Payments made after Jan 1st go to earnings for 2021, full stop. That includes work done december 16-31st.
Its is what appears on the W2 that is important , My W2 did not include the severance payout
I have similar concern and wrote to CVX HR via Benefit Connection.
I was told that for severance paid on or after Jan 1 will be tax in the next calendar year.
ALL GOOD!
No, @1kim. Had the company streamed the severance payment out over two years, that would not have served the retiree one bit. First off, the retiree could not have qualified to receive unemployment benefits. That’s only available if the severance was made as a single payment. Secondly, a lump sum severance payment is of greater use to anyone.
Don’t blame the IRS. If your company really cared about you they should have streamed the payments out over two years instead of one.
Gotta love the whining from the ungrateful losers with the fat severance checks who are upset that they have to pay taxes on the money that they receive which most people who lost their jobs only can dream of.
You did not get screwed since it appears that you received your final payment in 2021! You played it perfectly! Celebrate!!
OP, you did fine. The earnings period 12/16/2020 to 12/31/2020 falls into the 2021 tax year. The 2020 earnings period ended on Dec 15.
OP, you claim you got screwed (again), but you neglect to explain how. Could it be your misunderstanding (again)?
No need to worry. As previous poster said, IRS will treat income received in 2021 as 2021 income. That the pay period covered was in 2020 is irrelevant.
The IRS rules are set up to acknowledge when you actually received the payment, not when you earned it.
Sounds like from your information, the payment will be classified as 2021 income.
Hope this helps!!
When did you actually receive this payment?? In 2020 or 2021? That is how the IRS will classify this income. Chevron has no input on how this payment is classified for taxes. Not complicated.
Not sure why there is so much fuss about this topic, at the end of the year you have to pay tax either this year or next year, if you live like a king and spend too much then yeah it will be pai full, hopefully you saved a bit so the tax will not force you to go hungry in the bed for the rest of the year!!!
The irs will likely go by the W2 statement. If you were a business and were on a cash accounting system you could possibly show you did not get paid until January. But as wage earners with a w2 we don’t get the privilege of choosing our accounting.
Amount withheld doesn’t have anything to do with taxes owed. Income is income and will be taxed accordingly. However when it comes to Medicare some income will not count as Medicare wages.
worse problems to have, but good news is they tax at 20% witholding, thus, shouldn't owe anything next year. I got mine last year and combined with income from year my gross was all time high, but still received a refund due to 20% witholding and ~12% tax rate for first 100k of earnings counting the standard deduction...
Let’s meet up at Starbucks in Highland Village tomorrow (Saturday 2/6/21) at 9am. I’ve got an idea for starting a business. We can all make a lot more money than the peanuts CVX was paying us.
That is correct, the pay stub reflects work in Dec 2020. However, the payment itself was received by you in 2021 and that is all the IRS cares about. Income received into your bank account in 2021 is taxable for 2021 tax year, not 2020. When you get your W-2 from Chevron it should reflect this (payment will not be on 2020 W-2 but will be on 2021). There is no problem.
You only received the payout on Jan 2021, IRS may accept it as 2021