I live in California and am leaving my job. Should I get paid out for vacation time?
Does it make more sense financially to use up my vacation time before I leave or to get paid out for it once I leave? I believe that you pay extra in taxes when you’re paid out for vacation time….
5 Responses
zeuz
22 Apr 2010
v b
22 Apr 2010
First, find out if your employer pays for vacation time. They aren’t required to by law, though most do. (If they pay one person, they have to pay everybody.)
Second, if you do get paid, it doesn’t matter if you take as vacation on a time sheet or they pay you in a lump sum. It’s still taxable just like regular pay is. The only difference is that on an "irregular" payment, they may just withhold 25% for taxes rather than go through the payroll stub logic. If that’s too much, you get back as part of your refund when you file your taxes.
Judy
22 Apr 2010
Taxes will be the same either way. If you get one large check, withholding might be different but what you’ll end up paying will be the same – if they take out too much you’ll get it refunded.
StephenWeinstein
22 Apr 2010
For technical reasons, extra taxes might be withheld temporarily. However, the amount that you are allowed to keep (what is paid to you plus any tax refund that you receive minus any tax that you must pay when you file) and the amount that the government is allowed to keep (what is withheld plus anything that you pay later minus anything that is refunded to you) are not affected. Each additional dollar withheld results in one dollar more refunded to you later or one dollar less paid by you later.
Ben w
22 Apr 2010
You don’t pay "extra" tax for it, just the regular amount. If you don’t use up your vacation time before quitting you could just forfeit it ( depending on who you work for-for example, the U.S. Postal Service has its own rules which are governed by their Union contract etc. etc.). So, unless your situation says otherwise, rather than forfeit it, I would just use it up ( and enjoy it!). Good luck!
California law considers vacation time as "earned compensation". You must be paid for your vacation pay according to the California Department of Labor.