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From a tax perspective, the IRS views traditional severance payments as supplemental wages because they are not a payment for services. Severance paid to employees in a lump sum, unrelated to state unemployment benefits, is taxable as wages for both income-tax withholding and FICA purposes.
In addition, severance payments are classified as "supplemental wages" for income tax purposes. Employers must withhold income tax from such payments at a flat 22% rate and pay the money to the IRS.
Tax Type: Oil and Gas Severance Tax 3.75 percent of taxable value of oil or gas severed and sold. 1.875 percent of taxable value for enhanced recovery project oil and gas.
Yes, severance pay is taxable in the year that you receive it. Your employer will include this amount on your Form W-2 and will withhold appropriate federal and state taxes.
From a tax perspective, the IRS views traditional severance payments as supplemental wages because they are not a payment for services. Severance paid to employees in a lump sum, unrelated to state unemployment benefits, is taxable as wages for both income-tax withholding and FICA purposes.

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Yes, severance pay is taxable in the year that you receive it. Your employer will include this amount on your Form W-2 and will withhold appropriate federal and state taxes.
In addition, severance payments are classified as "supplemental wages" for income tax purposes. Employers must withhold income tax from such payments at a flat 22% rate and pay the money to the IRS.
Oil severance tax = 4.6% of market value of oil produced. Condensate tax = 4.6% of market value.
Tax Type: Oil and Gas Severance Tax 3.75 percent of taxable value of oil or gas severed and sold. 1.875 percent of taxable value for enhanced recovery project oil and gas.
DR 0021W -Oil & Gas Withholding Statement -Severance Tax Withheld from Oil Shale and Oil/Gas Payments.

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