If I'm fired from my job and receive a severance package - how is that taxed?

Grudun answered 3 months ago …

It depends on how much work the employer wants to do but it will be as a W-2 employee. The new question is how many checks will your employer issue. There can be up to 3: Last pay period, vacation payout and severence. Some employers will issue just one check which results in high income tax withholdings which are based on the pay period and total pay. Or they could issue separate checks which will keep your income tax withholdings lower since each check is considered separately. If you have any option take separate checks to let the government hold less of your money.