PDO (Paid Days Off) extra tax

[ptoby999]

My jurisdiction is: Florida

Work at a hospital in Florida, when I started working here you could
cash in PDO hours instead of taking the time off with no penalty (cash in 40 hours, get paid for 40 hours). Quit a few years ago the hospital said
the IRS told them they could not do that and that they would have to
penalize an extra 25% of the cashed in hours (cash in 40 hours get paid for 30 hours). I have checked several other hospitals employee benefits and do not see any penalty for cashing out PDO. Can you tell me if this is legal.
Thank You

 

[FlaRiptide]

That is definitely a new one I've never heard of. That would be similar to penalizing an employee for taking a cash payout of their accrued vacation time upon termination of their employment.

More than likely this is a misinterpretation. The withholding tax may be higher due to the 40 hours PDO being paid out on top of your normal payroll. This might put the pay for the period into a higher tax bracket.

But as far as a 25% penalty, sounds bogus to me. Been an accountant in Florida for 30 years.

 

[FlaRiptide]

You can request the payroll department to not tax or to tax differently the PDO portion. This would be no different than receiving a bonus. You would need to determine how this lump sum payment will affect your overall annual taxes. Make your determination of how you want the PDO taxed according to how it affects your total annual taxable income.