waterman

Hello,

I'm sorry that this is off topic but i'm hoping someone can give me some advice. I'm being laid off from my job and my last day is Thursday. I'm getting four weeks pay, vacation pay and money for my insurance. My boss wants to spread it out the next month to save on taxes. (the office is out of state and I work from home in Illinois). When I'm on unemployment would the state consider this income even though I am not working? I'm not sure if I overpay now on taxes that I would get the money back next year. Their website says that the money is for when I was working and not income earned income while on unemployment. The problem is I don't trust Ilinois.

So my question is should I take the money in one check or should I have the checks deposited every two weeks to save on the taxes?

Any help would be appreciated.

Thank you.

getrdunn

iTrader: (7)

I’m in Michigan however when will you receive the payment from the 4 weeks pay, vaca and insurance? So he’s giving you 4 weeks pay in advance? If so when? I assume it’s an advance (next 4 weeks) however I believe you’d have to show/categorize 1st quarter monies earned so depends on how your employer shows the monies dispersed. How long will you be off for. I don’t really see any worthy benefits for your employer.

waterman

Hello,

Normally I was getting paid twice a month. What I am thinking of doing is getting the lump sum on the 15th which is my last day and regular pay day. If I don't take the lump sum I will get a check on April 30th and May 15th. The check on the 15th would include the vacation pay and insurance. I'm thinking if I get the lump sum next week I don't have to worry about unemployment thinking that i'm getting income and not pay. The layoff is permanent which is to bad because I really liked my job!

speicher lane

You will want to check with the Unemployment as they may judge you as still remaining employed as money is coming in as per norm until that ends which would affect when your benefits can actually start.

Only benefit seems to be to your employer as they are not having a higher outlay of your pay in one lump sum.

Eddienel

Take the money and run. If you can get it in one lump sum then I would take it. Your employer is going to have to withhold taxes regardless. Im not seeing where there is any benefit to dragging it out. Any money received will have to be claimed when you file your taxes for this year.

waterman

Hello Everyone,

Thank you for responding. I'm going to take the lump sum and worry about taxes later. Luckily I have money set aside to last a while.

Lou

bajaman

I am sorry to hear this...my company has laid off 2/3 of its workforce in the last year, so I see the impact. You are fortunate you planned for this 'rainy day', so to speak...but it still sucks.

Awash

It sounds like you already made the decision but you would have been better off in taking it the two final payments as offered. Taking it as a lump sum will increase the amount of money the the feds and the Peoples Republic of Illinois takes in taxes now. It will not hurt you next year. The Peoples Republic of Illinois(PRI) consider the last 4 weeks of monies that your employer provided you as severance you can apply for unemployment and get both your severance and unemployment benefits.

Best of luck

waterman

Hello,

Im not sure if I will be getting one or two checks. When you say I won’t be hurt next year does that mean I will get some of the taxed money back?

Thanks

Awash

You can only make some assumptions as a lot of things can change for you between now and the end of the year. i.e. you could find a better paying job in a month and then you may be in a higher tax bracket next year so there can be as many positives that occur as negatives.

Let's assume your employer will offer you two more checks and you take them in one lump sum the taxes on that check will be slightly higher then you normally pay then lets assume you take unemployment as long as its available to you. Your tax burden will be significantly less than this years due to being on unemployment and you will likely get back all of that small amount of extra taxes (and then some) you paid for taking your severance in a lump sum.

If you choose to take your severance in 2 checks (assuming your employer gives you 4 weeks) you will still be fine next year in taxes as receiving unemployment should put you in a lower tax bracket. One thing to be sure of is that your employer gives you a specific date that you are severed from the company on. As an example your employer sends you a letter that states your last official day is 4/15 you can sign up for unemployment benefits after that and it will take a few weeks to get going in the mean time your severance pay will be coming in.

As an example the company I work for is in Illinois when downsizing they provided a document to folks that got severed stating the day they were to be severed on and paid 2 weeks severance for every year that they had worked for the company some folks received as much as 20 weeks of severance pay and collected unemployment during their severance and some chose to wait till their severance was almost up to sign up for unemployment. .

You can find all the rules on the Illinois unemployment website also