Amounts you receive as severance pay are
taxable and must be reported on your tax return. A lump sum payment for
cancellation
of your employment contract is taxable income in the tax year you receive it and must be reported
with your other salaries and wages on your tax return.
IRS publications about severance pay: For additional tax information about severance pay, wages, salaries, and other earnings, refer to
Chapter 6 of
IRS Publication 17,Your
Federal Income Tax. Please read this IMPORTANT
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