The IRS just passed a regulation that for teachers who work less than 12 months but get their salary spread out over 12 months (annualized), they will be charged an extra 20% excise tax. The only way to avoid this is to state in writing before the first day of the school year that you wish to have your salary annualized. This must be done every year before the first school day.
Someone must be staying up late at night thinking of ways to penalize teachers!
What do you think about this? Is there anything that can be done?
2007-08-01 17:01:00 · 7 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
The IRS cannot make regulations on how often a person is paid. Only the State or Local School Board could do that. You might want to check the source of your information.
There is no current suggestions for an additional 20% excise tax to be charged to teachers by the IRS .
2007-08-01 23:09:08 · answer #1 · answered by Anonymous · 0⤊ 1⤋
I thought this was a rumor. However, see the following discussion.
http://www.taxalmanac.org/index.php/Discussion:Teacher%27s_Income_Annualized
....New IRS regulations state that annualized compensation may be subject to an additional 20% excise tax. An employee can avoid this tax if the employee elects, in writing, to have his compensation annualized before an employee begins work for 2007-2008 school year. This regulation applies to both contracted and non-contracted school employees...
UPDATE:
Basically, since school teachers start their year in september and are basicaly unemployed July and August, if you have the school district pay you over the entire 12 month period, a portion of their pay they earned in 2007 isn't actually paid until 2008. The IRS has "newly" interpreted this as a non-qualified defered compensation plan. Apparently you can sign a waver to get rid of penalty. I found another discussion at this web site...
http://message.snopes.com/showthread.php?t=13606
2007-08-03 00:38:31 · answer #2 · answered by edandyvonnemoore@sbcglobal.net 3 · 0⤊ 0⤋
What is happening is that your school system is changing their pay system, and now the rumors are flying that the teachers are being taxed extra. There are no excise taxes for teachers.
What you need to do is check with your payroll department and ask for clarification. Then decide if you want your salary annualized or not.
2007-08-02 02:19:37 · answer #3 · answered by ninasgramma 7 · 0⤊ 0⤋
This is utterly ridiculous. If you earn the money for the school year and choose to have your pay annualized, why would you have to pay an extra 20% if you don't notify the IRS. I would like to know the person who came up with this stupid idea!
2007-08-05 15:45:40 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Check with your nearest office of Internal Revenue Service - Taxpayer Assistance Division.
2007-08-01 17:32:33 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I think it didn't happen, and don't know where you heard that. I would have hoped that teachers would be smart enough not to believe silly rumors.
2007-08-01 17:29:09 · answer #6 · answered by Judy 7 · 1⤊ 0⤋
untrue.
2007-08-02 03:21:20 · answer #7 · answered by eastacademic 7 · 0⤊ 0⤋