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Question for CPA's, and possibly Lawyers - regarding back pay and taxes
I had the unfortunate experience of being laid off a few years ago. My former employer attempted to screw me out of some accumulated vacation pay due to a verbal agreement we had when our system crashed and I had to forgoe my earned vacation and work twelve weekends and all holidays (kind of an emergency situation).
That said, everything was going well until my boss was let go and 6 months later, I was laid off when they closed my local office.
I was due many days/months of vacation time but there was no official record of this and I got screwed.
long story short, i sued them and it is looking like I will win. The employer has agreed to a settlement (were still negotiating the amount) but they have made an offer that is close.
My questions:
1) since this is considered back pay, I am stuck with a tax bill - I understand that.
2) we are agreeing that I will take 1/2 now and 1/2 on the first of the year (to help minimize tax)
3) I wondering, should I force the employer to pay me thru their payroll system so that they are forced to pay 1/2 of the SS & Medicare?
4) I'm feeling like they will tend to just cut me a regular expense check and since I am self-employed, I may get stuck with the full 15+% self-employment tax.
5) My lawyer is a great friend and lawyer but her specialty is not labor law, so I am trying to research as much as possible - this is my responsibility as far as i am concerned.
Any advice would be appreciated.
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