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unused vacation pay

Technical topics regarding tax preparation.
#1
juro  
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456
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18-Oct-2015 9:11am
Location:
USA
an employee has been terminated, and he has maybe fifty hours of vacation pay accrued.

The final paycheck should include all these hours, just like regular payroll hours, with payroll tax withheld.

My client wants to pay it as reimbursements, with zero tax withheld.
 

#2
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20
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2-Sep-2020 12:38pm
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Milwaukee, WI
Reimbursements for what? Even if the employee is legitimately owed money for things such as mileage or travel that amount should be paid in ADDITION to the fifty hours of accrued vacation.

Also, is there an employment agreement in place? If so, what does it stipulate for paying out accrued vacation upon termination of the employee?
 

#3
Nilodop  
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Pennsylvania
If employer is just trying to give the terminated employee a break (seems unlikely, but who knows), he can write the check in an amount that would be equal to the gross pay before withholding and then gross it up to cover the withholding. The grossed up amount would go on the W-2, 941, etc.
 

#4
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624
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21-Apr-2014 11:29am
Location:
California
From the replies already, you can see that what the "employer" wants to do seems a bit odd.

Any suggestion other than just paying the terminated employee via reported payroll for the accrued vacation pay and withholding the correct amount of taxes should probably be discussed with a labor attorney.
 


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