So I just looked at my payslip for the paycheck coming 1/12 and noticed that nearly $300 more is being withheld in federal taxes compared to all the checks from 2023. I did not make any changes to my withholdings, what gives?
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That's the "You're fired, but please still bend over" tax. They're too damn lazy to go in and adjust it so we don't end up paying the lump sum payment tax on all of it. You'll likely be able to recover some of that next year at tax time, but alas it's in the Feds hands until then.
Yeah, got the email and their bullsh-t response for the "$300" but my check was nearly $1000 less. Kind of difficult to plan your finances when you just up and get a 25% paycut from your severance pay because your ex-employer didn't want to pay out severance as a lump sum payment and instead keep that money on their books for end-of-year reporting.
From T-Mobile Payroll
As we crossed into the new calendar year, the Payroll System started withholding taxes at the flat supplemental rate on Severance payments. Your Severance documents/FAQs do communicate the flat supplemental tax withholding.
If you received severance pay in 2023, we understand this is a change from your 2023 checks, and may not be your preference, but the system is accurately withholding and is in accordance with the Severance guidelines.
Unfortunately, there is nothing we can do to override this on your paycheck(s), as it is a systematic calculation. While it was an unexpected change from year to year, if you previously received severance payments, the IRS provides guidance on how Supplemental Pay can have tax withholding calculated, and both situations are accurate per their guidelines. This should be consistent going forward in 2024.
In other words, deal with it.
You obviously can’t be trusted holding a full-time job, so you can’t be trusted with one big fat payout. Deal with it.
Take look at this: https://www.irs.gov/pub/irs-pdf/p15.pdf (Page 22)
They have the option to alter the tax but, they will not.
Their AI generated payroll system can't understand that you are not going to make your salary that you made in 2023 plus bonus. They are holding around 12% to much in most cases or a total of 22%. They have no fix. However, I am filing a complaint with the IRS as they should not be withholding the higher amount as we were not paid in a lump sum. I am fortunate as the missing money will not hurt my family. However, AI gets confused and doesn't understand the "different", types of pay. Good luck calling in. I was on hold for more than 25 minutes.
My withholding is the same. Well except that Social Security is being withheld in the new year as last year, I had enough earnings by about July 1 that I had maxed out my social security contribution.
It happened to all of severance people. Apparently they were not withholding our severance payments at the 24% supplementary/ bonus rate last year because we had regular income part of the year. In 2024, they are and so I too saw a huge decrease in federal withholding. Nothing we can do as they did warn us it may be withheld at the supplementary rate. You might get some back though when you do your 24 taxes next year.
My take home is $4 more than every salaried check last year which is odd because my benefits were a few dollars more per check now.