Is severance settlement (pay) subject to social security and Medicare withholding ??

My wife was laid off from her job and received a severance settlement (pay). Her company withheld income taxes as well as taxes for Social Security and Medicare. Is this correct? Somewhere, we read this issue had not been decided but potentially could file IRS Form 843 (Claim for Refund and Request for Abatement) to get the SSA and Medicare money back. Help! and Thanks

  • If one single employer withheld more then $4,624.20 for your social security, you need to contact your employer for a refund of the excess withheld.  There is no cap on income for Medicare taxes.
  • Restated - Yes, severance pay is subject to FICA same as regular wages.
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Search online I believe IRS 843 can help; I am trying to do the same and am looking for answers too I could use the money paid back.
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