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Submitted By: someone
Answered: January 16, 2019 8:54 pm
Answered: January 16, 2019 8:54 pm
My company is closing and I’m going to receive a large amount of severance pay. When is this taxable?
Severance pay is taxable in the year in which it is received. If it’s received in a lump sum, then it’s taxable in one year. If it’s spread over two or more years, then the portion received in each year is taxable in that year.
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Tax Glossary
Exemption
A fixed deduction allowed to every taxpayer, except those who may be claimed as a dependent by another person. Extra exemption deductions are allowed for a spouse on a joint return and for each qualifying dependent. A deduction of $3,400 is allowed for each exemption claimed on 2007 returns, but the deduction is phased out for certain high income individuals.
