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

TaxFacts Intelligence: December 5, 2022

Posted by William Byrnes on December 5, 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.

The IRS released guidance that could allow some taxpayers to qualify for a larger earned income tax credit by filing an amended 2021 return. It’s also time for many small business clients to start their 401(k) restatement process. Finally, in the midst of the so-called “Great Resignation,” it’s important to make sure clients understand the 401(k) vesting rules to avoid leaving money on the table when they change jobs.  Read on for more.

IRS Revises FAQ for Claiming the Earned Income Tax Credit.  The rules for claiming the earned income tax credit were expanded and liberalized in the wake of the COVID-19 pandemic.  The IRS has recently updated its guidance on claiming the credit to provide that taxpayers who are eligible for the credit can choose to calculate the earned income tax credit using their 2019 earned income if it was higher than their 2021 earned income, even if they did not have any earned income in 2021.  Taxpayers who did not file a return or claim the earned income tax credit for 2020 or 2021 can file an amended return to take advantage of the relief.  However, the IRS was clear to note that these taxpayers cannot use their 2020 income to calculate their 2021 earned income tax credit.  For more information on the personal tax credits, visit Tax Facts Online. Read More

Current DC Plan Restatement Cycle Ended July 31.  Clients who sponsor pre-approved 401(k) plans must have completed a plan restatement every six years (that’s true even if the client hasn’t actually made any changes to the 401(k) plan itself).  The previous restatement cycle ends July 31, 2022 for plans that have not been restated since August 2020.  It’s important for small business clients to make sure their plan document actually reflects how their particular 401(k) plan operates (for example, if the restated plan document neglects to exclude employee bonuses from consideration for a match, the employer could be subject to significant penalties if they actually do exclude employee bonuses when calculating the employee match).  The client should review the restatement carefully with qualified advisors and make sure their documents were signed before the July 31 deadline. If not, the client will need to hire a tax adviser to undergo compliance remediation.  For more information on the defined contribution plan qualification rules, visit Tax Facts Online.  Read More 

Understanding the 401(k) Vesting Rules in the Midst of the Great Resignation. It’s more important than ever for clients to understand how vesting can impact their retirement account balances.  The applicable vesting schedule establishes when the client who contributes to the 401(k) will be fully entitled to the full 401(k) balance. Cliff vesting is designed to encourage employees to remain with an employer for the long-term, rather than hopping quickly between jobs. The IRC permits employer-sponsored plans to provide that employer contributions to the employee’s account will not fully become available until after a certain period of time has passed (employee contributions must vest immediately). Under a graded vesting schedule, the employer match will begin to vest in increments beginning in the employee’s second year of service with the employer—employer matching contributions will gain an additional 20 percent in vesting each year thereafter until they are 100 percent vested after six years.  Under a three-year cliff vesting schedule, the employer match is fully vested after three years of service. The vesting schedule used by the plan must be clearly spelled out in the plan documents, and can be important for clients making decisions about new employment opportunities.  For more information on the vesting rules, 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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