Any advice for changing tax exemptions for a lump-sum severance package?

Any advice for changing tax exemptions for a lump-sum severance package?

by Nicholas J. Crocetti, CPA | Oct 20, 2017
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I have a question on the taxes for a lump-sum severance package. My HR rep said I may want to change my tax exemptions prior to the payout, but I don't want to end up creating a scenario where I will have to pay more next April. Any advice? 

Your HR representative may be correct. You should do a projection of your tax liabilities for 2017, for federal, state, and local income taxes. After completing the projection, you should review the projected withholding of federal, state, and local income taxes. If your present estimated withholding does not cover your liabilities, you should either increase your withholdings or pay estimated taxes to avoid potential penalties. Your CPA can provide you with the appropriate details. 
 
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Answered by: Nicholas J. Crocetti, CPA, is director of tax advisory solutions with CBIZ MHM LLC in Plymouth Meeting, Pa.
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