Taxes on vacation payout?

[Peoloom]

I'll be getting my accrued vacation time paid out as salary at the end of the month as I'm leaving my job. How is this taxed? Will it be taxed at a higher rate, like some sort of bonus? Or is it taxed at my normal rate?

[Rosamunda]

But it is up to you to check that your tax rate is adequate to cover your total annual income (you can check this using the Vero calculator). Otherwise you might get a nasty tax bill later on.

[riku2]

Most people have a tax card which shows two rates with a threshold for the month's income. Anything below that is at the first tax rate, anything above is at the second tax rate.
So you might have 4000e monthly threshold with 26% below that, 40% above it. If you earn 4100e then there is 26% on 4000e and 40% on 100e.

So when you leave your job you'll have more income in that month, so will pay the extra (above the threshold) at the higher rate.

Since you're leaving your job what you do for the rest of the year comes into play. if you don't work at all then you will have paid too much tax. if you get a new job which pays more then you will have paid too little tax (eg consider earning 3000e/month for jan-june but then 10,000eur/month for july-dec. The tax paid jan-june assumed a lower total annual income). In this case apply for a new tax card based on what you earned so far this year and predicted income for the rest of the year.

[Adrian42]

Most people have a tax card which shows two rates with a threshold for the month's income. Anything below that is at the first tax rate, anything above is at the second tax rate.
So you might have 4000e monthly threshold with 26% below that, 40% above it. If you earn 4100e then there is 26% on 4000e and 40% on 100e.

So when you leave your job you'll have more income in that month, so will pay the extra (above the threshold) at the higher rate.

Note that these 40% are not the exact actual tax rate to be paid in the end, this is what is being withhold from the salary.

In 2014 Vero will look at the complete salary you received in 2013 (including paid out vacation), calculate the exact tax to be paid for that, and the difference between that amount and the withheld taxes in 2013 will either be paid back to the taxpayer or has to be paid by the taxpayer.

E.g. if the person in this example would be unemployed after leaving his job he might end up with a tax rate of 20% for his complete salary in 2013 and get a big sum back from the withheld taxes.

[riku2]

at any time of the year you can visit the vero pages and create a new tax card. if you are going to finish your job and expect less income the rest of the year then estimate that on the new tax card. Then your final month's salary might have a much lower tax rate. But you must get this new tax card to your employer in time and It's probably too late to do it for this month though (if you are posting at the start of May and your last day is the end of May).

[Flossy1978]

There are two types of tax cards.

One where there is a monthly limit. You go over it, you pay the higher tax rate.

Second one is for the whole year. Go over that whole year sum before the end of the year, then you will pay the higher tax. Or I guess if you don't have an employer and you pay yourself and don't realise it, you'll end up with a nice huge tax bill to pay the following year.

Most people with regular income have the first tax card. Those working different hours, so different income every month often take the second card.

I have the same income every month, but I take the second tax card so I can have more of the summer bonus money. Though it puts my monthly tax number up a bit, I prefer it. It doesn't really matter. It all evens out to be fair with either card in the end.

[Pursuivant]

And you can't change the monthly/yearly tax cards mid-season, but stick to either monthly or yearly for the whole tax year...