Severance pay is taxable income and is considered to be part of your regular earnings. It is subject to FICA, federal and state income tax withholding. Because your severance payment(s) may be larger than your regular pay, you may even find that your income tax is withheld at a higher rate than you were used to. It will all show on your final W-2, and is put on your tax return to decrease any balance due or increase any refund.

The employer is correct in withholding taxes (federal and state) as well as medicare and social security taxes from your check.

Yes, severance pay is subject to regular income tax withholding. In most cases, your former employer's payroll department should take out the taxes. You won't have to worry about additional withholding, as long as they take out all applicable Federal and state income taxes.

In rare instances, you need to request withholding. The HR reps should be more than willing to comply. Don't let severance go through without the proper tax withholding applied. This will make your tax situation more complicated, since you'll surely owe income taxes. If you need to spend all your money, you may not have enough to cover the IRS tax bill either.

With regular withholding taking place, it should be perfectly fine. You can take the money, move along, and start seeking a new job.