Hello, I'm trying to plan my taxes for 2019 but have hit a snag with some unfamiliar territory. Any assistance is appreciated.
My wife is receiving a settlement for back-pay and damages from a former employer. My understanding is that the employer is responsible for making federal, state, and FICA deductions from the back-pay portion of the settlement. We were not married when she worked for this company. As such:
- Will the withholding be at a single or married rate? I figure this likely has to do with what the company has on file, but I'm asking to cover my bases.
- When doing our taxes, is the back-pay taxed at our current, married, rate, or is is taxed at a single rate since that's what she was at the time?
- Does the employer have to deduct federal and state taxes from the damages portion as well, or are we responsible for figuring that part out?
Thank you very much!
