I was just laid off from my job and received a retention bonus. We worked for 6 weeks knowing we were losing our jobs to another company. Our retention bonus was compensation of one week pay for each year worked and Fed withholding was to be 25%. When we got our checks we were also had Social Security tax and medicaid taken out. Why if it wasn't earned income?

Social Security and Medicare comes out of all income paid. Retention bonus is still considered income and is Medicare and social security need to come out.

Shirley