I’ve read the severance details in the employee handbook. I know it’s in payments unless you obtain another employer. Do you have the option to get severance in one lump sum if you have yet to retain a new employer?
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Ok, once again we have people confusing taxes with tax withholding.
TLDR withholding not same as actual taxes, you will get it back when filing a tax return.
Say you make 120k in 2024. You owe SS and Medicare. You also owe state (where applicable) and federal taxes. Let’s say Fed taxes end up being 24k. Now, say you work whole year and have equal withholding (for Fed taxes) come out but it’s 25k. You get 1k return when filing taxes. Instead say you work four months and get laid off and get 2 month notice period and then six months lump sum severance (because you got lucky and found job to start July). Ignore taxes from new job here. They will take the standard 12.5 k taxes for first six months and then a HIGHER withholding for the 60k lump sum. So you got 120k still but may have had 35k withholding. At end of year you file taxes and get 11k return. Why? You still owe 24k but they took out more. So don’t worry about it unless….. you get laid off at end of year and require immediate lump sum payout and don’t get new job because then they are paying some of next years salary this year so your income goes up and your marginal tax rate goes up. I had this happen to me at another employer who would force you to take lump sum and this was in an awful time to get a job where unemployment was twice as high as now. I also lost benefits due to this. This is the reason why taking a lump sum is not suggested (unless you do get replacement income).
"Your taxes don’t change unless the severance pushes your total income for the year into a new bracket.
You can earn 100K in a day or in 12 months it’s taxed the same."
Sorry, you are correct. I believe it is bonuses alone that are taxed at a higher rate.
Your taxes don’t change unless the severance pushes your total income for the year into a new bracket.
You can earn 100K in a day or in 12 months it’s taxed the same.
If you take a lump sum, you'll be taxed to the hilt on that big paycheck, but you also won't be paying your share of benefits every two weeks -- assuming you get another job and don't need/want them.
you'll also want to consider any potential tax implications of a lump sum
You would only forfeit health insurance and other benefits right? I don’t use any of their benefits currently anyways.
Why would you do this a forfeit benefits for the entire severance period?
Take what they give you and get another job ASAP and collect both your severance payments and your new job salary.
Freeze your The Work Number account as well as your credit reports from the three agencies.