Don't Mess With Taxes

The taxes taken out -- or not -- of your pay was the topic touched on last week at my other tax blog.

Let's start with Social Security and Medicare taxes, often shown as FICA on pay stubs, that usually are collected on severance pay.

If you've ever received a payout package after being laid off, you know how important every penny of that final check is. A recent federal court ruling could help you get a bigger last paycheck if you're ever in that position.

The 6th U.S. Circuit Court of Appeals agreed with a Michigan retailer and some of its former workers who argued that their severance packages were not wages for purposes of FICA taxes. The court agreed with the plaintiffs that these final payments were supplemental unemployment benefits.

Expect this case to eventually make it to the Supreme Court for a final decision.

In other situations where FICA and income taxes aren't taken out of pay, most people must pay estimated taxes. The deadline for 2012's third 1040-ES voucher is Monday, Sept.17.

You also might find these items of interest:

• Tax concerns of the unemployed
• Figuring your estimated tax payments
• Don't forget to figure SE taxes