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Reporting Employee Separation Agreements
June 25, 2025
Q.
What is the amount that should be reported to an ex-employee in this following scenario. Note: The agreement is not a "settlement" agreement, but a "separation" agreement, but two checks will be issued--$7,000 to the ex-employee and $3,000 to the attorney. Company ABC agrees to makes a one-time payment to the ex-employee of $10,000 less taxes and withholdings (the "separation payment"), in return for signing and complying with the agreement. For tax purposes, the company and the ex-employee…
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