| Are there any special IRS withholding rules for severence pay
The IRS has stated that severance pay would be treated as "supplemental wages" so employers would be given a choice of either one of the following as far as withholding for sverance pay;
1. the employers could withhold a flat 25% of each employees severance payment.
2. the employers can aggregate severance pay with any regular wages and calculate a withholding on the total wages that is normally applicable to that employee based on W-4 withholding and taxable income. | 
