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How to tax severance payment?

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atari
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Posts: 121


« on: November 21, 2008, 02:40:13 pm »

Hi,

I was let go from my company, and I got $2,000 cash severance, plus some business property, plus free rent. I am trying to estimate the tax implication of this.

Do I use fair market value to determine the value of the business property and the rent? The employer essentially wanted to close down operations at one location, so I received the equipment, furniture and office location as part of my severance package. The lease on the office will still be paid through early 09 by the former employer. The severance agreement does not list the rent as part of the package, however I am able to stay in the office rent free. I am not sure if the value of this severance package will be listed on the W2 or if this will be something that will need to be determine by me when I file taxes. I am not sure how to estimate the value of the severance package (for tax planning purposes) and if the free rent should be included.

Pls, help.
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« on: November 21, 2008, 02:40:13 pm »

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sunset
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Posts: 31


« Reply #1 on: November 24, 2008, 06:49:08 pm »

Hi,

I was let go from my company, and I got $2,000 cash severance, plus some business property, plus free rent. I am trying to estimate the tax implication of this.

Do I use fair market value to determine the value of the business property and the rent? The employer essentially wanted to close down operations at one location, so I received the equipment, furniture and office location as part of my severance package. The lease on the office will still be paid through early 09 by the former employer. The severance agreement does not list the rent as part of the package, however I am able to stay in the office rent free. I am not sure if the value of this severance package will be listed on the W2 or if this will be something that will need to be determine by me when I file taxes. I am not sure how to estimate the value of the severance package (for tax planning purposes) and if the free rent should be included.

Pls, help.

The $2,000 cash severance payment will be included in your W-2 at the end of the year.

If the rent is not part of the severance agreement, they I would say no need to worry about it.

The same with the equipment, unless it is included in his W-2 at FMV.
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