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Income Taxes › Severance Pay

Income taxes are taxes that are collected on the individual earnings of persons or entities. Depending on the jurisdiction, income taxes are calculated and collected in a variety of ways. Some tax systems collect... more +
Income taxes are taxes that are collected on the individual earnings of persons or entities. Depending on the jurisdiction, income taxes are calculated and collected in a variety of ways. Some tax systems collect income taxes based on a progressive scheme, while others may utilize a proportional or regressive framework. less -
Ogletree, Deakins, Nash, Smoak & Stewart,...

Puerto Rico’s Taxation of Severance Payments

Ogletree, Deakins, Nash, Smoak & Stewart,... on

Employers considering reductions in force in Puerto Rico should be aware that the rules on the taxation of severance pay in the United States and Puerto Rico are different. The U.S. rule is straightforward: severance pay...more

Dechert LLP

Termination Payments - Changes to the taxation of UK termination payments

Dechert LLP on

In this OnPoint, we report on two changes to the taxation of termination payments to departing employees of which employers need to be aware – first, the levying with effect from 6 April 2020 of employer’s national insurance...more

WilmerHale

The Section 4960 Excise Tax: Application to Tax-Exempt and Affiliated Taxable Entities

WilmerHale on

Federal tax law changes enacted with the Tax Cuts and Jobs Act of 2017 may require tax-exempt organizations to reevaluate their compensation practices, particularly with respect to employee severance. Section 4960 of the...more

Foley & Lardner LLP

How Do I Report Non-Qualified Plan or Severance Payments to a Former Employee? Hint: You Should Probably Use a W-2, Not a 1099!

Foley & Lardner LLP on

Employers commonly make payments to former employees for a number of reasons. Two of the more routine payments are those from a non-qualified deferred compensation plan (such as payments from a supplemental executive...more

Proskauer - Tax Talks

Proposed Section 409A Regulations Would Clarify Separation from Service Analysis in Connection with Change in Status From Employee...

Proskauer - Tax Talks on

Pursuant to the final regulations under Section 409A of the Internal Revenue Code of 1986, as amended, a termination of employment generally occurs at such time as the employer and employee reasonably anticipate that the...more

BCLP

Good News! New 409A Regulations (Yes, Really!) – Part 1: Firing Squad

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On the TV show Futurama, the aged proprietor of the delivery company Planet Express, Professor Hubert J. Farnsworth, had a habit of entering a room where the other characters were gathered and sharing his trademark line,...more

McDermott Will & Emery

IRS Issues Regulations Affecting Compensation Arrangements at Tax-Exempt Organizations

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On June 21, the IRS issued long awaited proposed regulations under Section 457 of the Internal Revenue Code that affect a broad range of compensation arrangements at tax exempt organizations. If a compensation arrangement is...more

Mintz - Employment, Labor & Benefits...

Supreme Court Rules that Severance Payments Are Taxable Under FICA

Mintz - Employment, Labor & Benefits... on

I have to admit, when I read the news that the Supreme Court had ruled earlier this week that severance payments are “wages” subject to payroll taxes, I thought I was on crazy pills: Didn’t we already know that? But,...more

Nexsen Pruet, PLLC

US Supreme Court Rules Severance Pay Subject to FICA Taxes

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This week, the U.S. Supreme Court confirmed that severance pay is subject to FICA tax. There had been uncertainty about whether FICA taxes were due on severance payments following disparate circuit court rulings in...more

McAfee & Taft

SCOTUS: Severance payments are taxable

McAfee & Taft on

In the words of noted American statesman Benjamin Franklin, “in this world nothing can be said to be certain, except death and taxes.” Given Franklin’s thoughts, yesterday’s decision by the U.S. Supreme Court in the case of...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

High Court Rules Some Severance Payments Are Taxable

Ogletree, Deakins, Nash, Smoak & Stewart,... on

Yesterday, the Supreme Court of the United States held that severance payments are taxable under the Federal Insurance Contributions Act (FICA) when made to employees whose employment is involuntarily terminated. The Court...more

Ervin Cohen & Jessup LLP

Be Sure to File a Protective Claim for FICA Taxes

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The Supreme Court has agreed to review the Sixth Circuit Court of Appeals decision in United States v. Quality Stores which held that severance payments to involuntarily terminated employees were supplemental unemployment...more

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