From today’s TSTA (Texas State Teachers Association) briefing
IRS Clarifies Deferred Compensation Rules
Some may recall the brief flurry of concern last year when the IRS rules seemed to indicate that educators might owe additional taxes for deferred compensation for receiving their annual pay over twelve months rather than ten months when the pay was given across calendar years.
There is a new ruling effective for the taxable year that includes July 1, 2008.
The new ruling exempts educators from this requirement as long as the educator receives all of the deferred compensation within thirteen months of beginning the service for which they are being paid and the total amount of deferred payment does not exceed an IRS allowable level ($15,500 in 2008).
The specific example provided with the new ruling was for an educator working a ten month school year that began Sept. 1, 2008 and ended on June 30, 2009. The person could continue to be paid through the end of August 2009. To exceed the $15,500 allowable deferred compensation amount that person would have to earn more than $232,500. (emphasis mine)
Somehow, I don’t think anybody I know on a 192 day contract has anything to worry about.
By: Jeanne Tobias on July 14, 2008 
