Welcome Guest. Register Now!  


For 2013 Tax Tips For Year 2013.


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 05-04-2014, 06:26 PM
Junior Member
 
Join Date: May 2014
Posts: 2
Severance - 1099-MISC

My husband received a severance check, it was a lump sum, employer did not pay any portion of taxes. He was sent a Form 1099-MISC by his employer. The IRS is now stating my husband could be liable for self-employment tax on it, on top of the Federal tax he paid, could this be true?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 05-04-2014, 10:55 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by kkam10 View Post
My husband received a severance check, it was a lump sum, employer did not pay any portion of taxes. He was sent a Form 1099-MISC by his employer. The IRS is now stating my husband could be liable for self-employment tax on it, on top of the Federal tax he paid, could this be true?
His ER had to report on W-2 and withhold taxes from his severance pay.
ERs preferred to report on 1099-misc since they do not have to pay/match 7.65% of FICA taxes for EEs. Your husband should talk to his ER as to why they did not treat it as a regular EE’s wages. Also 1099-misc does not make HUGE difference; your husband end up paying about 7.5% more as compared to W-2 income; as your husband is a reg W2 EE and however he received his severance check 1099MISC, so he needs to pay self employment tax, 15.3%, not 7.65% but he can deduct 50% of the SECA taxes on 1040 line 27 by reporting the amount on Sch SE as there is no business related expenses ocured.Your husband doensn;t need to file Sch C.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 05-04-2014, 11:00 PM
Junior Member
 
Join Date: May 2014
Posts: 2
Quote:
Originally Posted by Wnhough View Post
His ER had to report on W-2 and withhold taxes from his severance pay.
ERs preferred to report on 1099-misc since they do not have to pay/match 7.65% of FICA taxes for EEs. Your husband should talk to his ER as to why they did not treat it as a regular EE’s wages. Also 1099-misc does not make HUGE difference; your husband end up paying about 7.5% more as compared to W-2 income; as your husband is a reg W2 EE and however he received his severance check 1099MISC, so he needs to pay self employment tax, 15.3%, not 7.65% but he can deduct 50% of the SECA taxes on 1040 line 27 by reporting the amount on Sch SE as there is no business related expenses ocured.Your husband doensn;t need to file Sch C.
Wow - thank you for your response! Appreciate it.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Severance Pay / AGI / PMI Deductions alecdean Divorce Tax Issues 1 02-24-2011 10:14 PM
Severance Pay check spyce1 Miscellaneous 0 06-27-2010 08:34 PM
1099 misc? lehman09 Income 1 01-30-2009 12:16 PM
Severance Pay taxquestion Income 2 12-07-2008 06:45 PM
Severance/Bonus Pay Received From Another State aaronb Income 0 03-13-2008 12:40 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.