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Taking payroll taxes from your lump sum isn't the end of it. Did you actually have that big a tax liability the next year? 2 years ago is still recent enough you can go back over your taxes and itemize if it would benefit you.
Yes, I itemized my taxes the next year and got back about 1/4 of the amount of taxes they took out on that lump sum.
Yes, I itemized my taxes the next year and got back about 1/4 of the amount of taxes they took out on that lump sum.
Income averaging can also be used to lower the hit. Honestly, even with years of experience I'd consider large, anomalous income years something for a CPA to look at.
Hummm, that sounds familiar to me also. I got 52 weeks pay (they capped it at 52 max, as I should have got 56. Two weeks per year of service) when I was RIF'ed at my 28 year to that point mid-Michigan I.T. job 2 years ago. They did it lump sum also, and they took out 36.9% taxes right off the top!
That's right, 36.9% lump sum taxes. Federal, State, and both SS side of taxes.
I felt like I got raped...
To be fair, pretty much every bonus I've ever received I can assume they will chop off at least 1/3rd for taxes. You should never have to pay more in taxes than you owe though, so you should see some of that back. It's just how they calculate pay outside of what you're usually expected to receive.
Income averaging can also be used to lower the hit. Honestly, even with years of experience I'd consider large, anomalous income years something for a CPA to look at.
I'm pretty sure the IRS ended income averaging quite a long time ago.
The problem some will have is if they sign up for Medicare part B within the next year or two, providing they qualify. That huge income will cause them to pay about 3x the amount for the premium, although they can get away from that by showing SS that there was a work event like losing a job.
I'm pretty sure the IRS ended income averaging quite a long time ago.
3-4 year averaging for anyone was ended, but there is still a special form that allows averaging lump-sum retirement payments and a few other things. Not sure if it would be useful here; that's why I suggested a CPA.
I don't think 60 weeks is very generous. It's just enough carrot to tempt people who might be thinking of "starting a restaurant" or something. But not really enough carrot to actually do something with.
Verizon has been doing this for the last few years. I worked at Verizon for 15 years and took a package back in 2013. It was nice but as one poster stated you still need a job unless you are retirement age. I left because I was looking to leave anyway and already had another job lined up.
Wow so many buyouts by so many companies. Is this how it was back in 2006 ish? I was too young to pay attention back then, wonder how much of it is dejavu for people & how much of it is new
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