Judge Rules FICA Tax on Severance Pay is Improper

You may not be required to pay Federal Insurance Contributions Act (FICA) tax on any severance pay you receive from your severance agreement.¬† A Judge for the United States District Court, Western District of Michigan ruled that severance payments made to severed employees are not subject to FICA¬† because they are not considered “wages.” See United States v. Quality Stores, Inc., No. 1:09-cv-44 (W.D. Mich. Feb. 23, 2010).

You should consult with your accountant regarding any severance pay you receive from a severance package.

March 20, 2010 -Tom McKinney – Castronovo & McKinney – New Jersey Severance Attorneys

Thomas A. McKinney, Esq.

Thomas A. McKinney, Esq. is an experienced New Jersey Employment Lawyer in all major areas of labor and employment law, including discrimination, harassment, overtime violations, wage and hour claims, sexual harassment, wrongful discharge, Title VII, ADA, ADEA, FMLA, LAD, FLSA, and all other employment law claims. If you have questions about this article, contact Thomas today by clicking here.