Teachers and other school employees returning from summer vacations are dealing with the prospect of an IRS rule change on deferred compensation that could see their taxes increase by 20 percent if they aren't careful.
The rule involves deferred compensation and applies to school districts that offer employees who work for 10 months but are paid over a 12-month period the option of having their payments spread out throughout the year, as many school districts do. In 2004, Congress changed the law on deferred compensation in the American Jobs Creation Act to keep corporate executives from avoiding taxes on deferred salary. A rule change by the IRS meant that the law applied to school employees as well.
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