>No, you pay taxes on the payout. It doesn't matter whether it's one lump sum payment or a series of annual ones.

But since taxes are calculated on your income for the current year, if you're taxed for the lump sum you are jumping up several tax brackets; if it's spread over the years, you may not even be much of a blimp on IRS's radar.

If it's the case of the tax already been deduced from the payment, then this branch of the thread is pointless.