Employment Tax Rates 2009
March 7th, 2010
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Question: Should severance pay count as employment earnings for Unemployment Claim?
I was laid off last November 2008 and from December 2008 to March 2009 I was receiving “severance pay” from the employer that laid me off. The California Unemployment Office first counted the $14,000+ of severance pay for that 4-month duration as income for the last quarter earning thus giving me a larger weekly claim.
They recently sent me an amended claim stating that the $14,000 will NOT count as income in the last quarter of 2008 thus reducing my weekly pay from $474 to only $370.
My question is shouldn’t that severance pay count towards my last quarter earnings? Does severance pay not count at all when calculating someone’s earnings? I am being taxed on it and at a very, very high rate (25%).
Thanks!
Answer: Dear S: Unfortunately it's CA game and they make the rules. A double hit as the IRS taxes it and unemployment pay. This year '09 the first $2400 of unemployment pay is not taxed.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent
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2009 Payroll Tax Cut
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