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Originally posted by: pjstroh
When the airline I used to work for went under I paid taxes on my severance pay..and my remaining vacation pay...and on the subsequent unemployment checks I got from the government.
Originally posted by: pjstroh
When the airline I used to work for went under I paid taxes on my severance pay..and my remaining vacation pay...and on the subsequent unemployment checks I got from the government.
There are no FICA taxes on unemployment checks....income tax, yes. I can see paying FICA on vacation pay because that is earned money that your employer must pay out when you leave. Severance is at the whim of the employer. There is no requirement for them to pay you severance. I don't think that should be subject to FICA because it's not earnings like regular or vacation pay. The Supremes say I'm wrong though.
The final impact will likely be smaller severance packages as the employer pays half the FICA taxes....oh and there will be more money in the Social Security lock box. Wait a minute...we don't have one of those.