Hi, J1nonly1,
Congratulations on that nice six figure severance. It sounds like you are discussing ordinary income, which will become part of your taxable income and likely impact your taxes and perhaps your tax brackets (Fed and CA).
Here's the federal tax brackets for 2024 and here's the California tax bracket info. Note that one-time payments are typically taxed as supplemental payments with a federal tax rate of 22% and a CA rate of 10.23% (see page 15). These rates may or may not be adequate given your total taxes and tax brackets.
Failure to pay tax penalties can be assessed in certain circumstances. Here's a great article on that topic from a federal perspective. This article also discusses how to make federal estimated tax payments. The article is aimed at self-employed folks, but the principle holds... This FTB page gives you information on underpayment penalties and you can learn how to make estimated tax payments to the CA FTB using the link.
Here are some general tax tips for investors. We are not permitted to give specific investment advice.
Hope this helps.
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Regards,
Karen
TurboTax Expert
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