My ex-employer paid me a severance vis the normal pay periods after I was laid off. However, my W2 does not report the payments. For example, let's say I made $20,000. I was laid off. They paid me an additional $20,000 in the normal weekly paychecks after being laid off and took out state and federal taxes. The wages/tips (Box 1) of the W2 does not reflect the $40,000 total. Should it or should only the other tax boxes reflect the taxes taken out of the total $40,000?
Yes, severance if taxable at all levels, including the federal tax. Here is the official IRS document, Publication 4128 - Internal Revenue Service. Your answer is the first one at the top of the page numbered 2.
Contact your employer.
was the final paycheck issue in 2020? if so, that extra $20K is reported in 2020 otherwise the W-2 is wrong.
Thank you four your response. Correct and that was taxed appropriately (i.e. state and federal taken out of normal pay and additionally out of severance). However the YTD on the final paycheck (no longer an employee) and Box 1 don't match by the amount of severance I was paid. Should those match? To clarify, my last paystub as an employee is close to what the W2 has but it doesn't include the severance.
For what it's worth, I did contact my employer who has been unresponsive and therefore contacted the IRS.
edit: I did contact the IRS and they said while the additional severance was indeed taxed and shows on the W2, that amount doesn't necessarily have to be in Box 1. I understand there will be a little discrepancy between YTD and Box 1 but in this case, the discrepancy was the total severance amount. It still doesn't make sense to me why that is not included as they took taxes out of it and I am just trying to get reassurance that the W2 is correct.