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There is disagreement between the 6th Circuit and the Federal Circuit as to whether severance is wages as defined in IRC 3306, which are subject to FICA, or supplemental unemployment, which is not.

It seems to me that this would also call into question whether severance pay is earned income. That would make a difference if someone received severance early in a tax year, remained unemployed for the rest of the year, and wanted to contribute to an IRA. Probably not a common occurrence, but possible.

Patzer
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