Q & A
How are Social Security Taxes handled on vacation payouts?
Full Question: If I retire near the end of the year, is my vacation payout going to be subject to Social Security tax if I have already reached the upper limit for payments under FERS? And if I retire at the end of November, is the vacation payout going to be taxable in the next year if I receive the payment for the unused leave after January 1?
Answer: SS tax is only taken out of income up to $117,000 in 2014, so no tax would be taken out of your leave payment if you received it in 2014. Of course, if you received it in 2014, it would be taxable for federal income tax purposes in 2014. If you received it in 2015, it would be taxable for federal income tax purposes in 2015, but would have SS tax taken out.
Source: John Grobe is President of Federal Career Experts, via FedSmith.com – 9/15/2014
Notice: The “Read more…” link provided above connects readers to the full content of the posted article and/or external information sources. The URL (internet address) for any links are valid on the posted date; socialsecurityreport.org cannot guarantee the duration of the links’ validity. Also, the opinions expressed in these postings are the viewpoints of the original source and are not explicitly endorsed by AMAC, Inc. or socialsecurityreport.org.