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3 Stories to Start Your Week: October 25, 2021

 

Guidance on Re-Hiring Retirees

This past Friday, the IRS issued some guidance aiming to help employers navigate some potential issues upon rehiring retirees and retaining employees past retirement age. This comes as the labor market is still in short demand and employers are struggling to fill positions with qualified individuals. To convey this information the IRS released two new Frequently Asked Questions, after recently attempting to overhaul its FAQ process.

The IRS in a news release stated that employers may rehire former employees even if they have already retired and begun receiving benefits. On top of this the IRS stated, “Also if permitted under plan terms, those employees may continue receiving the benefits after they are rehired. Moreover, an employer can generally choose to make retirement distributions available to existing employees who have reached age 59 ½ or the plan’s normal retirement age. This may assist in the retention of employees eligible for retirement.” Hopefully, this guidance will be able to take some of the strain off of the labor market and assist in regaining normalcy.

Wealth Tax Likely to be Utilized

As Democrats have been discussing alternative methods to fund their $2 trillion package, Nancy Pelosi was quoted this past Sunday stating, “We will probably have a wealth tax.” The plan, coming from Finance Committee Chairman Ron Wyden (D., OR.) would not be a true wealth tax, rather it would impose an annual tax on unrealized capital gains on liquid assets held by billionaires. This is slightly different than a true wealth tax which would apply to all assets held by the wealthy, not just liquid ones.

Janet Yellen went on CNN Sunday to speak on this proposed tax saying, “I wouldn’t call that a wealth tax, but it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals and right now escape taxation until they’re realized.” Those familiar with the proposed plan say that it would likely only affect those either with $1 billion in assets or $100 million in income for three consecutive years.

Child Tax Credit Crisis

In attempts to reduce Biden’s originally planned $3.5 trillion bill, down to around $1.9 trillion, there have been several line items on the chopping block. Recently, and to the dismay of most, the Child Tax Credit is being considered for major reduction. Currently, the Child Tax Credit offers monthly advance payments (which may be opted out of) and was set to expire in December of 2021. The new legislation had originally planned to have extended this program for four more years, however, now they may expire this year.

 Democrats are still attempting to figure out a way to make this manageable and are considering many options for edits. There has been discussion about reducing the family income cap to qualify for this credit from $150,00 for married couples ($112,500 for single head-of-household), all the way down to around $60,000 per family. It was also proposed that parents in the household must hold a job in order to qualify for the credit.

Thoughts? Give us a call at 516-541-6549, visit our website for more news updates, and don’t forget—have a great week!

 
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