The story just above this one reported that EEOC ordered an agency to increase an employee’s back pay check by enough to cover the extra income taxes she would have to pay due to receiving multiple years of income in one tax year. So, we thought we would quote from another new EEOC decision in which it discussed in detail what an employee must show to have his/her extra income taxes paid.  EEOC wrote, . . .

In the case of a lump sum back pay award, individuals are entitled to compensation for the extra tax liability they are required to pay as a result of receiving a lump sum award, as opposed to the actual amount they would have had to pay if they had received their pay over a period of time….It is the receipt of the pay in one lump sum that causes the extra tax liability, not the back pay award itself. Id. Complainant bears the burden to prove the amount to which she claims entitlement…. The Commission has noted that a complainant, who bears the burden of proof on this issue, must submit evidence showing the difference between the taxes that she paid on the lump-sum payment and the taxes that she would have paid had the salary been earned over time… A complainant must “provide exact and detailed calculations showing the amount he is claiming.”

For more details, check out Heidi B. v. Alex M. Azar II, Department of HHS, EEOC No. 0120181119

About AdminUN

FEDSMILL staff has over 40 years of federal sector labor relations experience on the union as well as management side of the table and even some time as a neutral.
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