How are severance pay and tax deductions related?
An example of an AI chatbot conversation about tax deductions on severance pay.
How are severance pay and tax deductions related?
Severance pay is considered taxable income, so it can affect your overall tax liability.
Do I have to pay taxes on the entire severance amount?
Yes, the entire severance amount is subject to federal and possibly state taxes.
Are there any deductions I can claim to reduce my tax burden?
You may be able to claim certain deductions, like job search expenses, but it depends on your situation.
What if I received a lump sum severance payment?
A lump sum payment is still taxable, but it may push you into a higher tax bracket for that year.
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