Hello
To answer your questions
a) I am a US citizen and also a bonified resident of Kenya
b) I am/was employed by a US-based non-profit organization
c) All my work was performed in Kenya
d) I am/was an employee.
Here is additional information
a) I have worked for other US-based non-profit organizations from Kenya for 10 years.
b) I have always earned above the foreign income tax exclusion ($112,000 for 2022, $108,700 for 2021, $107,600 for 2020, $105,900 for 2019, and $104,100 for 2018)
c) I worked for my most recent employer since 2018 and they never withheld taxes when I reached the foreign income tax exclusion.
d) Previous employers have never deducted taxes for amounts over the maximum foreign income tax exclusion.
d) When I file my taxes, I typically owe federal taxes
e) My most recent employer withheld 22% from my severance because the amount would put my year-to-date earnings over $112,000.
f) I was paid for accumulated leave days, which were not taxed
Their justification for the deduction for twofold
a) When adding the severance to year-to-date earnings, I exceeded $112,000, and
b) Severance is considered supplemental income.
So, I would like to get clarification on the following
a) Can an employer automatically withhold taxes without the employee filling out a W-4?
b) Is severance considered supplemental income?
Thank you so much in advance.
