The U.S. government relies on trillions of dollars in tax revenue to finance its operations. A key Supreme Court decision recently helped preserve billions of dollars in tax revenue for the IRS and the U.S. Treasury.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the case, which involved a dispute by employees who had been laid off that the severance pay they received shouldn't be subject to FICA withholding taxes. Dan notes that the workers argued that their severance represented "supplemental unemployment benefits" that would have been exempt from Social Security and Medicare tax. But the Supreme Court disagreed, forcing those laid-off employees to pay withholding taxes. Even though paying FICA taxes means more wages in calculating Social Security benefits, other employers waiting in the wings to collect huge refunds if the Supreme Court had decided the other way would have cost billions.
Take advantage of this little-known government tax rule
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.