By Robert W. Wood
You may get severance pay when you quit your job, are laid off, or fired. You also might get severance later if you sue and settle. Whether or not your pay is labeled “severance,” and regardless of when it is paid, the IRS generally views severance like any other pay. It’s taxed as wages, so is subject to withholding and employment taxes. If your employer hands you a severance check as you walk out the door, you may well expect it to have all the payroll deductions you’re used to seeing on your regular paycheck..