Severance Pay

The U.S. Supreme Court ruled severance pay is taxable income.  Lower courts issued divided rulings on the issue.  However, it should not come as a surprise that the Supreme Court recently ruled that severance payments to laid off workers are subject to Social Security, Medicare and federal income tax.  Therefore, recipients of severance pay should retain a CPA to understand the tax implications of severance pay.  Also, get full details of the ruling in U.S. v. Quality Stores:

http://www.accountingtoday.com/news/supreme-court-rules-severance-pay-taxable-income