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Question: I've been laid off. better to take severance or file for unemployment?

(Posted by: NozDontKnowMyNamz on 2010-03-04 07:13:44)

Is this a not- so- bright question? Never experienced a layoff. Yea the tax thing is a killer, is it worth risking asking for more due to the tax deduction?

Posted by: michr on 2010-03-04, 13:37:15

It is NOT an either or proposition........... you accept the severance and file for unemployment, each state is different as far as when your benefits will start, due to the severance........ there are NO tax implications, both severance and unemployment are taxable income and your rate at the end of the year will be the same.......... the employer does NOT have to offer ANY severance, trying to negotiate is NOT very bright. ANY severance amount is better then just unemployment......

Posted by: Kristopher on 2010-03-04, 07:16:38

File for unemployment right away. Ask your company for an exit interview. And decide which pays more and how long you can receive before accepting. Companies may fight on the exit interview because the fork the tax over. So ask him do I have to appeal or no in the exit interview. You'll get it.

Posted by: jacksprat on 2010-03-04, 07:18:15

Collect your severance, then file for unemployment when it runs out. In some states you can collect both, you just have to report your earnings to the unemployment department and they will adjust your weekly rate.

Posted by: bluewithoutu on 2010-03-04, 07:20:48

Severance is usually a bit preferred over unemployment - depending on what your company offers you, it's usually not really "optional " either. It's something they'll give to any employee that is being laid off. Often times the severance will include some health coverage and it'll either be a lump sum or a set period of time to continue to receive a paycheck... generally it's not more than 3 months worth of wages. In today's economy, it's usually closer to 1-2 months of your normal pay w/ your benefits still in force being paid by the company. After the severance runs out, then you can apply for unemployment if you haven't found a job. You cannot file for unemployment while you're receiving severance though. I was almost laid off last year and was offered what I described to you above. Sadly, mine would have been a lump sum and it would have been taxed at about 40%, so it wasn't nearly as substantial as it seemed. Yeah, I'd have gotten most of it back in my taxes, but still... it would have been tough to make it through the holidays.