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William Byrnes (Texas A&M) tax & compliance articles

TaxFacts Intelligence: Nov 11, 2022

Posted by William Byrnes on November 11, 2022

The Texas A&M Master and LL.M. programs (e.g. international tax, transfer pricing, wealth management, or risk management) are accepting applications from financial professionals and from lawyers. Over 850 enrolled, the enrollment for a course’s section is kept to between 20 and a maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

We have a few significant updates for 2023 this week. To keep up with rising costs, the Social Security cost-of-living adjustment, or COLA, will rise by a historic 8.7% for 2023–and the earnings base will rise along with it. Additionally, the IRS has finalized regulations that would fix the so-called ACA “family glitch” to help more taxpayers qualify for the premium tax credit starting in 2023. On the other hand, many valuable benefits for health FSAs have now expired, so taxpayers must revert to the old rules going into 2023.

A note about our branding: You may have noticed that Tax Facts is no longer using the National Underwriter brand and is now using the ThinkAdvisor brand. At ALM Global, LLC, we are working to align our expansive tax and finance portfolio to make pertinent coverage more accessible. We have joined Tax Facts with ThinkAdvisor, a global information, data, intelligence and content division with reporters and editors all over the world. Although we have a new look, all of the valuable Tax Facts content is still here for you.

Social Security Administration Announces Record High COLA Adjustments for 2023. The Social Security Administration (SSA) announced that the 2023 Social Security cost-of-living adjustment (COLA) is 8.7%–which is the largest COLA increase that has been seen for decades (by contrast, the 2022 Social Security COLA was 5.9%). Working taxpayers will also have to pay Social Security taxes on a higher percentage of their income for 2023. The Social Security wage base–the amount of wages subject to Social Security taxes–is set to increase from $147,000 to $160,200 in 2023 (meaning that wages in excess of $160,200 will be exempt from Social Security taxes). Social Security and SSI recipients should expect to receive information about their new benefit amount by mail beginning in early December. For more information on how Social Security taxes apply, visit Tax Facts Online. Read More

IRS Finalizes Rule to Fix the ACA “Family Glitch.” The IRS has finalized proposed regulations that are designed to change the ACA rules governing premium tax credit eligibility. The final regulations provide that the affordability of employer-sponsored coverage for the employee’s family would be based on the amount the employee would be required to pay to cover both the employee and eligible family members, rather than the individual employee alone. Typically, employees are only eligible for a premium tax credit if their employer fails to provide “affordable” health coverage. “Affordability” is based on whether the employee contributions for self-only coverage exceeds a percentage of the employee’s household income (as indexed for inflation). Under the prior rules, if self-only coverage was affordable for the employee, coverage was also deemed affordable for a spouse and dependents (so that the spouse and dependents would not qualify for the premium tax credit). Under the new rule, family members are disqualified only if the cost of family coverage is less than the annual threshold. “Family coverage” means any employer plan that covers related individuals other than the employee (including self-plus-one plans). The regulations also create a separate minimum value rule for family members, so that they do not lose premium tax credit eligibility if the employer plan does not provide minimum value to the family members (regardless of cost). The regulations are effective for tax years beginning after December 31, 2022. For more information on the premium tax credit, visit Tax Facts Online. Read More

Reminder: Covid-Related Health FSA Provisions Expire in 2023. Although the COVID-19 public health emergency has now been extended through January 13, 2023, many COVID-related tax benefits have not been extended past 2022. As taxpayers plan to enter 2023, it’s important to remember that most of the relief related to health flexible spending accounts (FSAs) has expired. That means taxpayers will once again be subject to the “use it or lose it” rule and limited to a $570 carryover into 2023 (if the plan allows it). Many plans also were amended to eliminate the requirement that the participant participate in the FSA in the following year to take advantage of the carryover provisions. Generally, the applicable rules going into 2023 with respect to grace periods and carryovers from health FSAs will depend on the terms of the plan document as it existed prior to COVID-19. For more information on the expanded health FSA rules that applied during the pandemic and the standard rules governing FSAs, visit Tax Facts Online. Read more

Look in your Tax Facts Online app for our continuing analysis of 2022 and 2023 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier of law schools and is ranked in the top 10 for the employment of its graduating law students among U.S. law schools.

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