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Maryland tax

fossett4fossett4 1 Post
in Compensation Vote Up0Vote Down
I'm wondering if anyone knows the norm for cashing out vacation and how it is taxed?  My husband recently left an employer to go to another company.  He had accrued 55+ hours of vacation.  Upon receiving the cash out check, we noticed that it was taxed at 4X the normal rate.  When questioning why such a high rate, we were told that it was taxed at a bonus rate????  I've never heard of such a thing and wondered if anyone out there knows if this is the standard as that is what we were told.  I've worked for companies in the past and when I left, I was always given my vacation and it was taxed like normal payroll....  Any info would be greatly appreciated.  Thanks
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Comments

  • 2 Comments sorted by Votes Date Added
  • dhall111dhall111 123 Posts
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    We tax it at the normal rate.  Of course, if it increases the weekly check by much it may push into the higher tax bracket and be taxed at the higher rate.
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  • IT HRIT HR 595 Posts
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    I work for a MD company and we tax at the normal rate as well.  I agree with the previous posting that if the company includes it in the last check with other hours worked then it could move you up to the next tax bracket, but not 4x.  If you have an accountant that does your taxes I would call and ask them.  They should be able to provide you with written documenation on the tax law that you could use to go back to the company and get them to fix the check. 
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