Q. Your response on Aug. 2 indicates the lump-sum payment of unused annual leave is reduced automatically by 25 percent to cover federal, state and local taxes. The lump-sum payment is subject to Social Security withholdings. Is the Social Security taken out as part of the 25 percent, is it taken before the taxes come out, or after the taxes come out?
A. It’s included in the 25 percent.
2 Comments
If the lump sum AL payout pushes you over the max income subject to social Security taxes for a given calendar year will the payroll system catch that and reduce the 25% withhold or will you have to identify it in your tax statement as excess SS tax withheld.
Your question falls outside the boundaries of this forum. You’ll have to check with your payroll office.