Judge Rules FICA Tax on Severance Pay is Improper

By Thomas McKinney

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

About the Author
Tom McKinney is an experienced NJ 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. Tom is admitted to practice in the States of New Jersey and New York, United States District Court for the Eastern District of New York, Southern District of New York, District of New Jersey, and United States Court of Appeals for the Third Circuit. Prior to forming the firm, Tom practiced at Gibbons P.C. in Newark, NJ. If you have any questions regarding this article, contact Tom here today.