Skip to main content
Find a Lawyer

Severance Pay Taxable

This article was edited and reviewed by FindLaw Attorney Writers

| Last reviewed

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw’s team of legal writers and attorneys and in accordance with our editorial standards.

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area.

The U.S. Court of Appeals for the Fifth Circuit has decided that the entire amount of a separation severance payment given to a taxpayer upon termination of employment is taxable as income. The payment was made in conjunction with a separation and release agreement signed contemporaneously with termination of employment. The employee urged excludability under IRC Section 104(a)(2), but that section deals with damages for personal injury and requires the existence of a justiciable claim and an express settlement of such claim. Ball v. Commissioner, Case No. 98-60263 (5th Cir., December 31, 1998), was reported by BNA.
Was this helpful?

Copied to clipboard