Gave notice at work - PTO payout tax question

[ktrask]

I'm hoping someone here will know the answer to this...because you are all brilliant!

I gave my notice at my current job. Wahoo to that! I have 11.25 days in my PTO bank that will be paid out when I leave. My question is how will this check be taxed? Will it be taxed like a bonus check, or taxed like a normal paycheck?

I'm just trying to figure out what the rough take home pay will be at the end of the day for it. I gave my notice up to the 12th (gave it last week), and I'm considering asking to leave on the 10th instead. I really hate my boss with a passion, and I feel like leaving early will give me a couple days to decompress with DD at daycare and hubs at work before starting the new job.

I have a rough figure of how much taking those two extra days will cost us, but I'd also like to figure out how the PTO time will be taxed. I feel like if it taxed one way vs the other it makes the decision different.

 

[clutter]

I'm hoping someone here will know the answer to this...because you are all brilliant!

I gave my notice at my current job. Wahoo to that! I have 11.25 days in my PTO bank that will be paid out when I leave. My question is how will this check be taxed? Will it be taxed like a bonus check, or taxed like a normal paycheck?

I'm just trying to figure out what the rough take home pay will be at the end of the day for it. I gave my notice up to the 12th (gave it last week), and I'm considering asking to leave on the 10th instead. I really hate my boss with a passion, and I feel like leaving early will give me a couple days to decompress with DD at daycare and hubs at work before starting the new job.

I have a rough figure of how much taking those two extra days will cost us, but I'd also like to figure out how the PTO time will be taxed. I feel like if it taxed one way vs the other it makes the decision different.

Ultimately, it is taxed at your highest tax rate, as any additional dollars are. So if you are in the 28% tax bracket, you will pay 28% tax on it. (Same with state taxes.) No way around that. As for the withholding, call your payroll. If they withhold less than your highest tax bracket, you will have to make up the difference with your return. Remember that. When you prepare your return, you can answer your own question- why is my refund so much lower?

 

[amcnj]

I think they are normally considered supplemental wages and the irs withholding is 25%. But there may be other methods. Maybe your payroll office can tell you what they do.

 

[sksjasams]

Be sure you know your HR guidelines on PTO use after resignation notice is given. Where I work, you must give full 2 weeks notice, you can not use more than 8 hrs PTO during your last 2 weeks, and you can not use PTO for your last day of work, or you will forfeit your remaining PTO balance.

Good luck with your new job!!

 

[lvillotta1]

I resigned from my job very quickly in may with no prior notice. I had 130hrs and it was taxed at 40%.
Laurie

 

[nowellsl]

Be sure you know your HR guidelines on PTO use after resignation notice is given. Where I work, you must give full 2 weeks notice, you can not use more than 8 hrs PTO during your last 2 weeks, and you can not use PTO for your last day of work, or you will forfeit your remaining PTO balance.

Good luck with your new job!!

What she said

 

[Claire&TheBoys]

In my experience, payouts of that nature are taxed at a flat rate, something around 28%. I would expect to have SS/MC taxes withheld (total 7.65%), plus income tax at about 28%, plus any state taxes.

 

[tvguy]

Be sure you know your HR guidelines on PTO use after resignation notice is given. Where I work, you must give full 2 weeks notice, you can not use more than 8 hrs PTO during your last 2 weeks, and you can not use PTO for your last day of work, or you will forfeit your remaining PTO balance.

Good luck with your new job!!

Any penalty for not giving 2 full weeks is a violation of labor law. My last employer had to re-write their employee handbooks after they found out 2 weeks notice may be common courtesy, but there is no requirement is you are an at will employee.

 

[ktrask]

MA is an at will state, so it's not required to give 2 weeks. I gave three because I work in accounting and we are at quarter end.

I have 11.25 days in my PTO bank. I talked with HR, an they are OK with me leaving on the 10th as it's still longer than 2 weeks notice since I gave notice last week. Boss lady (who sucks and is the reason I'm leaving) told me she'd think about it and let me know tomorrow. I reality...asking is to be nice. According to HR I could call in those last 2 days and would still be paid out my remaining PTO as it is earned time.

 

[rhiansmom]

Any penalty for not giving 2 full weeks is a violation of labor law. My last employer had to re-write their employee handbooks after they found out 2 weeks notice may be common courtesy, but there is no requirement is you are an at will employee.

This will be state specific. Several states don't even require payout of vacation/PTO at termination.

 

[tvguy]

This will be state specific. Several states don't even require payout of vacation/PTO at termination.

That certain could be.