A salary continuance is a plan wherein former or retired employees of a corporation continue to receive their normal salary for a certain period of time.
These payments are substituted for a lump sum payout and are frequently favored since they allow the employee to continue receiving various additional business benefits, such as medication, pension, dental, and life insurance plans.
What Is Salary Continuance?
Salary Continuance is a formal agreement between an employer and an employee to provide the employee with either a portion or their entire salary for a predetermined period of time after the employee leaves the firm.
A salary continuation plan may also be adopted in high-risk work situations when employees are at risk of getting harmed on the job.
If you have budgetary concerns and would like a consistent source of income, a salary continuation plan is the best option. As previously noted, selecting a salary continuation plan may also make you eligible to continue receiving the aforementioned business perks.
However, if you believe you will find a job quickly or if the firm is at risk of dissolving, it may be advisable to opt for a lump sum settlement.
Is It The Same With Earned Income?
Salary continuance qualifies as earned income, meaning it is considered normal job income, and the amounts received by you within a fiscal year are taxable.
However, a lump sum payout will not be considered earned income and, depending on your circumstances, maybe a preferable solution.
The ultimate decision on which option to pursue is very subjective and might vary from case to case. Paying close attention to your financial status and requirements can assist you in determining which choice is most suited to assist you in navigating the following phases of your future.
Millions of US taxpayers may be surprised when they receive their tax returns in 2023, due to the expiry of numerous pandemic benefits created by policymakers to assist Americans to weather the catastrophe.
According to Jackson Hewitt’s chief tax information officer, Mark Steber, this might result in people receiving lesser tax returns for the 2022 tax year. According to IRS data, the average tax refund in 2022 (for the 2021 tax year) was about $3,200, a 14% increase from the previous year.
The IRS said on Thursday that it will begin taking tax returns on January 23, and the filing date will be April 18, providing taxpayers three additional days beyond the regular April 15 deadline. Because April 15 comes on a Saturday, the District of Columbia celebrates Emancipation Day on April 17.
Steber observed that most of the perks that enhanced refunds during the epidemic had expired, including government stimulus money and the extended Child Tax Credit (CTC). Even the Internal Revenue Service warns taxpayers that checks may be smaller. In a November news release, the Internal Revenue Service warned, “Refunds may be less in 2023.”
As an example, the CTC, which is credited for bringing millions of children out of poverty, has reverted to its pre-pandemic levels under the current tax code. The CTC will return to its previous level of $2,000 per child, as opposed to the pandemic credit of $3,600 per child.