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Two law professors, in a brief to the Supreme Court, said they think Biden’s student loan forgiveness plan is “unlawful” but they still urge the court to reject the legal challenges brought against the policy.
William Baude, of the University of Chicago, and Samuel Bray, of the University of Notre Dame, said the plaintiffs’ theories in the two lawsuits the court is considering are “wrong.”
More than 10 other briefs in support of the president’s plan have been filed with the justices.

Activists hold a student loan forgiveness rally near the White House on April 27, 2022.
Anna Moneymaker | Getty Images News | Getty Images

Although they call President Joe Biden’s student loan forgiveness plan “unlawful,” two university law professors are urging the Supreme Court to reject the legal challenges that have been brought against it.
“The standing theories that have been thrown at the wall in these cases are wrong, and many of them would have dangerous implications,” wrote William Baude, a law professor at the University of Chicago Law School, and Samuel Bray, a University of Notre Dame law professor, in an amici curiae brief filed on Wednesday with the nation’s highest court.

An amicus, or amici, curiae brief allows individuals or organizations other than the parties in the case to offer their information or expertise.
Biden announced in August that tens of millions of Americans would be eligible for cancellation of their education debt — up to $20,000 if while in college they received a Pell Grant, a type of aid available to low-income families, and up to $10,000 if they didn’t.
Since then, Republicans and conservative groups have filed at least six lawsuits to try to kill the policy, arguing that the president doesn’t have the power to cancel consumer debt without authorization from Congress and that the policy is harmful.
The Supreme Court has agreed to hear two of those legal challenges.
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Baude and Bray, in their brief, address the issue of so-called legal standing. The law professors say it’s supposed to be the party most affected by a policy that challenges it in the courts.
In their lawsuit against the president’s plan headed to the Supreme Court, six GOP-led states argue that companies in their states that service federal student loans, particularly the Missouri Higher Education Loan Authority, or MOHELA, would lose profits as a result of federal student loan forgiveness. But the law professors say that, in that case, MOHELA should have brought the legal challenge, not the states. The other states in the suit are Nebraska, Arkansas, Iowa, Kansas and South Carolina.
“Missouri is not the proper party to pursue relief for MOHELA’s lost loan servicing fees,” Baude and Bray wrote.
“Whether under modern doctrine or more classical terminology, the federal courts have the power to issue the requested relief only if it is being requested by the correct plaintiffs,” they wrote.
The legal challenges follow a trend that Baude and Bray say they find worrisome, in which states are too easily allowed to challenge a federal action they disagree with.
If the justices side with the states and overlook their shaky legal standing, the professors write, the Supreme Court risks sitting “in constant judgment of every major executive action — which is not its constitutional role.”

More than 10 other amici curiae briefs have been filed with the Supreme Court in support of the president’s loan forgiveness plan.
A former U.S. representative from California, George Miller, filed one of those defenses, arguing that the Heroes Act of 2003 allows the Biden administration to carry out its plan. Miller was a co-sponsor of that legislation.
“The Heroes Act gives the Secretary of Education the authority to ‘waive or modify any statutory or regulatory provision’ regarding federal student-loan programs ‘as the Secretary deems necessary in connection with a … national emergency,'” Miller wrote in his amicus curiae brief. The country has been operating under an emergency declaration due to Covid since March 2020.

The Biden administration has cited the Heroes Act of 2003 as the law that grants it permission to carry out its loan forgiveness plan, saying that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation is necessary to stave off a historic rise in delinquencies and defaults.
More than 20 state attorneys general argue in their brief that “the relief offered to borrowers falls squarely within the authority Congress gave the Secretary to address such emergencies.”
“The Secretary’s action here is appropriately calibrated to ensure that the borrowers who have been hardest hit during the pandemic will not needlessly default on their student loans and suffer the attendant cascade of economic harms,” the attorneys general wrote.
The justices will hear oral arguments Feb. 28.

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After another challenging year in 2022 for the IRS, the agency may be primed for a better 2023 tax season, according to the National Taxpayer Advocate.
Last year, the IRS made “considerable progress” reducing the backlog of unprocessed returns, the organization said in its annual report to Congress.
However, the Taxpayer Advocate says agency improvements may take time.

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After another challenging year for the IRS in 2022, the agency may be primed for a better 2023 tax season — but improvements may take time.
The National Taxpayer Advocate on Wednesday released its annual report to Congress covering last year’s biggest issues at the IRS, which includes recommendations to fix these problems. 

“The bad news is that taxpayers and tax professionals experienced more misery in 2022,” wrote National Taxpayer Advocate Erin Collins. “The good news is that since the close of the 2022 filing season, the IRS has made considerable progress in reducing the volume of unprocessed returns and correspondence.”
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The IRS started 2022 with an unprocessed paper backlog of 4.7 million original individual returns, 3.2 million original business returns and 3.6 million amended returns, according to the report. By Dec. 23, the paper backlog was down to roughly 400,000 individual returns and about 1 million business returns.
Based on this progress, the report finds the IRS is “poised to start the 2023 filing season in a stronger position.”
During the past two seasons, the IRS couldn’t tackle current-year paper-filed returns until after the filing season ended. But the “significant reduction” of inventory in 2022 will allow the agency to process paper returns during the filing season, the report said.   

“We have begun to see the light at the end of the tunnel,” Collins wrote. “I am just not sure how much further we have to travel before we see sunlight.”
While the report expressed optimism about the reduced backlog, increased IRS funding to boost staffing and the agency’s new direct hire authority, Collins warned that improvements won’t happen immediately, especially as new workers are added and trained.
“The IRS needs to end the vicious cycle of paper backlogs,” she said. “As employees are trained and report for duty, I expect we will start to see improvements in service, probably by the middle of 2023.”

We have begun to see the light at the end of the tunnel. I am just not sure how much further we have to travel before we see sunlight.

Erin Collins
National Taxpayer Advocate

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The Federal Trade Commission proposed a rule that would ban noncompete clauses nearly across the board.
A member of CNBC’s Financial Advisor Council, currently bound by such an agreement, describes what this regulation would mean to him.

Ted Jenkin signed a noncompete agreement when he sold his financial advisory practice in 2019.
Source: Ted Jenkin

When certified financial planner Ted Jenkin sold his financial advisory practice in 2019, he signed a nonsolicit and noncompete agreement that prohibited him from taking clients from the firm for five years — or from taking any other job in the industry, anywhere in the country. 
“When you sell a business, largely you are selling clients or ideas, but for you not to be able to do the work in this business makes no pragmatic sense whatsoever,” he said. “It’s insane.”

Bound by this clause, Jenkin, who is a member of CNBC’s Financial Advisor Council, stayed on as an employee until the end of last year.
“Now I can abide by the contract or do something in the industry and we’ll have a legal battle,” he said.
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That is, unless a federal regulatory agency has its way.
Recently, the U.S. Federal Trade Commission proposed a new rule banning the use of noncompete clauses in employee contracts nearly across the board because, the agency said, they suppress wages, hamper innovation and prevent entrepreneurs from starting new businesses.

The proposed rule would require companies with existing noncompete agreements to rescind them and inform current and past employees that they have been canceled, in which case Jenkin would be free to pursue other employment.
“I’d be the first person to start working again,” Jenkin said. “I wouldn’t have the fear of getting into a legal battle just because I’m working in my profession.” 

Nearly a fifth of U.S. workers sign ‘noncompetes’

Noncompetes are widely used in industries such as finance but also, increasingly, in many other occupations as well, according to the FTC, “from hairstylists and warehouse workers to doctors and business executives.”
Most often there is little wiggle room: Less than 10% of workers have any ability to negotiate these clauses, and 93% of them read and sign them anyway, according to the National Employment Law Project.
It’s estimated that more than 30 million workers — or roughly 18% of the U.S. workforce — are bound by such agreements.
“Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand,” FTC Chair Lina Khan said in a statement.

If this practice is stopped, wages could increase by nearly $300 billion a year, according to the FTC. 

‘Noncompete agreements are an important tool’

Still, there are several steps before the proposed regulation will go into effect, including the “inevitable litigation” challenging the FTC’s authority, said Michael Schmidt, a labor and employment attorney at Cozen O’Connor in New York.
“Attempting to ban noncompete clauses in all employment circumstances overturns well-established state laws which have long governed their use and ignores the fact that, when appropriately used, noncompete agreements are an important tool in fostering innovation and preserving competition,” said Sean Heather, the U.S. Chamber of Commerce’s senior vice president for international regulatory affairs and antitrust. 
An outright ban is “blatantly unlawful,” Heather said. “Congress has never delegated the FTC anything close to the authority it would need to promulgate such a competition rule.” 
If it gets tied up in the court system, the rulemaking process could take up to a year or even longer, according to Schmidt.
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The Federal Trade Commission proposed a rule that would ban companies from requiring workers to sign noncompete clauses.
Approximately 30 million workers are bound by these agreements, which are meant to protect the investments companies have put into their businesses and employees.
Without them, wages could rise by nearly $300 billion a year.

Job hopping is widely considered the best way to improve your career prospects and pay.
Sometimes, noncompete clauses stand in the way. These contracts are meant to protect the investments companies have put into their businesses and employees. It’s estimated that more than 30 million workers — or roughly 18% of the U.S. workforce — are required to sign one before accepting a job.

Recently, the U.S. Federal Trade Commission proposed a new rule banning the use of noncompete clauses in employee contracts, which suppresses wages, hampers innovation and prevents entrepreneurs from starting new businesses, the agency said.
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The proposed rule would also require companies with existing noncompete agreements to scrap them and to inform current and past employees that they have been canceled.
“That’s part of what makes this so radical,” said Michael Schmidt, a labor and employment attorney at Cozen O’Connor in New York. Not only is “the federal government taking this action broadly but with practically no exception.”
As a result, the impact will be felt by companies with employees who are governed by noncompetes as well as companies looking to hire workers who are bound by noncompetes, said Benjamin Dryden, a partner at Foley & Lardner in Washington, D.C., who specializes in antitrust issues relating to labor and employment.

“This regulation will affect, more or less, every business in the country,” he said.

Noncompetes are increasingly used across industries

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“Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand,” FTC Chair Lina Khan said in a statement. 
In many cases, noncompetes affect white-collar workers in fields such as finance and technology but they are increasingly used across a wide range of industries, the FTC said, “from hairstylists and warehouse workers to doctors and business executives.”
One report from the White House and U.S. Department of the Treasury found that 15% of workers without a college degree are subject to noncompete agreements, as are 14% of workers earning less than $40,000. 
A ban could boost wages by nearly $300 billion a year and narrow the pay gaps between white workers and minorities, as well as between men and women.
If passed, this regulation “will open up more competition between companies for workers,” said Najah Farley, senior staff attorney at the National Employment Law Project.

Noncompetes degrade wages and working conditions by eliminating one of the most effective means workers have to improve their job quality — advocating for or moving to a better job.

Najah Farley
senior staff attorney at the National Employment Law Project

“Employers have taken advantage of the lack of laws and regulations in this area to push these agreements onto unsuspecting workers across all income levels and job titles,” Farley said.
“Noncompetes degrade wages and working conditions by eliminating one of the most effective means workers have to improve their job quality — advocating for or moving to a better job,” she said.
“When appropriately used, noncompete agreements are an important tool in fostering innovation and preserving competition,” Sean Heather, the U.S. Chamber of Commerce’s senior vice president for international regulatory affairs and antitrust, said in a statement. 
An outright ban is “blatantly unlawful,” Heather said. “Congress has never delegated the FTC anything close to the authority it would need to promulgate such a competition rule.” 
There are still several steps before the proposed regulation will go into effect, including the “inevitable litigation” challenging the FTC’s authority, cautioned labor and employment attorney Schmidt.
This rulemaking process could take up to a year or even longer if it gets tied up in the court system, Schmidt said.

What employees should do now

Thomas Barwick | Getty Images

Workers who have been impacted by noncompetes should submit comments to the FTC on the proposed rule, Farley advised.
The comment period is open through March 10 and the FTC will review each submission and make changes based on that feedback.
“The more people who submit comments, the better,” she said.

What employers should do now

Companies should also take advantage of the FTC’s 60-day comment period and “let their voices be heard,” Schmidt advised.  
This is meant to be a “constructive process,” Dryden said. “If you think this will do harm to your legitimate business, submit comments to the FTC explaining your thoughts.”
“I wouldn’t be surprised if the FTC ends up scaling back this regulation,” he added.
Still, “there was clearly momentum building toward this,” Dryden said. In fact, many states already have limitations on noncompete agreements and it’s not surprising the federal government is testing a blanket ban under Section 5 of the FTC Act, which prohibits unfair methods of competition, he said. 

“It’s too early for businesses to take any drastic action, but companies should be mindful that’s a real risk,” Dryden said.
For now, “use this as a reason to look, as an organization, at how you are protecting your business,” Schmidt advised. There may be other contracts, such as non-disclosure or non-solicit agreements, that can accomplish the same goal.
“Even if this FTC rule doesn’t ultimately survive, state and local governments are becoming more active,” he said. “We are going to continue to see this trend of limitations and restrictions whether it’s by state legislatures or state attorney generals.”
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More than 65 million Social Security beneficiaries are getting a boost to their benefits this month.
Here’s when you can expect your check.

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On Jan. 18, the first benefit checks of 2023 will go out to beneficiaries whose birthdates fall on the 11th through 20th of their birth month. Those beneficiaries can expect their benefit checks on the third Wednesday of every month.

On Jan. 25, benefits will be paid to beneficiaries who were born on the 21st to 31st of their birth month. Those beneficiaries can expect their benefit checks on the fourth Wednesday of every month.
Other beneficiaries are scheduled to receive their Social Security benefits on the third of every month if they also receive Supplemental Security Income (SSI) benefits or if they received Social Security before 1997. (The payment date will be earlier in June, September and December since the third falls on a weekend in those months.)

1. Prices are still high

An 8.7% COLA is hard to beat. Even amid record high inflation, most workers are not seeing raises that high. Moreover, both stocks and bonds suffered poor performance in 2022.
Yet there’s one thing the record high Social Security COLA still can’t beat: persistently high consumer prices prompted by inflation.
Because of that, your purchases will probably consume any increase you see in Social Security benefits, noted Joe Elsasser, founder and president of Covisum, a Social Security claiming software company.
“Although it might seem like a raise, it’s probably not a real raise,” Elsasser said.

2. Medicare premium costs are down

The good news for Social Security beneficiaries is that Medicare Part B premiums are down this year.
Monthly standard Part B premiums have fallen 3%, to $164.90, this year. In contrast, those standard Part B premiums rose by 14.5% in 2022, to $170.10.

As those monthly premium payments are typically deducted directly from Social Security checks, beneficiaries stand to see more of the COLA. (This may vary depending on how much you have withheld from your benefit checks for taxes.)
Higher-income Medicare beneficiaries may pay less in 2023 for premium surcharges known as income-related adjustment amounts.

3. Your taxes may go up

As Social Security benefits increase, beneficiaries may be susceptible to more taxes on that income.
Up to 85% of Social Security benefits may be taxed based on a formula known as “provisional” or “combined” income. Those taxes start to kick in for individuals with more than $25,000 in combined income and couples with over $32,000.
Combined income is the sum of a portion of Social Security benefits plus adjusted gross income and non-taxable interest.

Because the brackets for combined income remain fixed, and are not adjusted for inflation, more retirees may be subject to taxes each year.
As a result, beneficiaries may want to carefully plan their retirement withdrawals to minimize an increase in taxes. That may include having more taxes withheld from your Social Security benefits.
Careful planning now can also help reduce the chances of increases in income-related Medicare premium surcharges in future years.
Experts say it’s best to enlist the help of a tax professional as soon as possible, especially as tax-filing season approaches.
“Don’t wait to see your CPA by April 15; it’s too late,” Brian Vosberg, a certified financial planner and enrolled agent who is president of Glendora, California-based Vosberg Wealth, previously told CNBC.com.

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The Biden administration has rolled out a new proposal to dramatically lower monthly payments for federal student loan borrowers.
Borrowers could see their payments drop by half.

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The Biden administration rolled out a new proposal this week to dramatically lower monthly payments for some federal student loan borrowers.
If and when the overhauled income-driven repayment plan becomes available, some people could see their bills decrease by as much as a half, according to the U.S. Department of Education.

As student debt has become a bigger burden on households, more borrowers have enrolled in income-driven repayment plans, which date back to the mid-’90s. These plans cap borrowers’ monthly bills at a share of their discretionary income with the goal of making their debt more affordable to pay off.
Between 2010 and 2017, the share of undergraduate borrowers registered in the plans swelled to around 25% from 11% , and that percentage continues to rise.
Here’s what you need to know about the proposed plan.

How does the new plan differ from existing ones?

Currently, there are four income-driven repayment plans (all of which sound a lot alike): the Income-Contingent Repayment Plan, the Income-Based Repayment Plan, the Pay As You Earn Repayment Plan and the Revised Pay As You Earn Repayment Plan.
The plans typically trade lower payments for a longer repayment timeline that concludes in debt forgiveness, providing an alternative to the Standard Repayment Plan that spreads debt obligations evenly over a decade, or 120 months.

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Under the Education Department’s new proposal, the agency isn’t creating a fifth plan but instead overhauling the current Revised Pay As You Earn Repayment Plan, or REPAYE.
Instead of charging borrowers 10% of their discretionary income a month, under the proposal, it would charge them just 5%. After 20 years of payments on undergraduate student loans, any remaining debt is canceled.
Those with original student loan balances of $12,000 or less may get their loans forgiven after just 10 years.

Who will qualify?

The new option should be available to borrowers with undergraduate and graduate student loans, although undergraduate borrowers will have lower payments.
Those with Parent Plus loans won’t be eligible to enroll in the overhauled plan.

Defaulted loans are typically ineligible for income-driven repayment plans, but under the new proposal rolled out this week, those who’ve fallen behind may be able to sign up for the income-based repayment plan.

When will the option become available?

The new REPAYE plan could officially be available July 1, 2024, according to higher education expert Mark Kantrowitz, but some parts of it may be implemented sooner. (The proposed regulation needs to go through a 30-day public comment period and then there’s a window before new rules can go into effect.)
Once the option is available, borrowers can call their student loan servicer to enroll in the new REPAYE option, or apply at StudentAid.gov.
“Any new plan will likely take quite some time to implement, so borrowers will have plenty of time to learn about how it might work,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

Is the forgiven debt taxable?

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If someone lands the jackpot in the next drawing, it would mark the second-largest Mega Millions prize ever won and the fourth largest in lottery history.
With the chance of hitting the jackpot just 1 in 302.6 million, the grand prize has been climbing higher through twice-weekly drawings since mid-October with no ticket matching all six numbers pulled.
Here’s what the initial tax bill would be, and how much more you may owe.

Scott Olson | Getty Images

You may face long odds of hitting the Mega Millions jackpot — now worth $1.35 billion — but the taxman is always guaranteed a slice when there’s a winner.
The jackpot jumped again after no ticket matched all six numbers drawn Tuesday night to land the grand prize. If won in the next drawing — set for Friday night — it would mark the second-largest Mega Millions jackpot ever and the fourth-largest lottery prize in history.

With the odds stacked against a single ticket winning the motherlode — 1 in 302.6 million — the amount has been growing since Oct. 14 when the jackpot was reset to $20 million after two tickets sold in Florida and California split a $502 million grand prize.
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Of course, the advertised amount is always what you’d get (pretax) if you were to claim your windfall as an annuity spread over three decades and taxed each year as you receive the income.
Most winners, however, choose the lump sum cash option, which for this jackpot is $707.9 million.
That amount would be reduced by a mandatory 24% federal withholding, or $169.9 million, which would lower your winnings to $538 million. Yet because the top marginal income tax rate of 37% applies to income above $578,125 for individual tax filers and $693,750 for married couples, you could count on owing more to the IRS at tax time.

Many jackpot winners tap their philanthropic side and give some of their windfall to charitable causes. Those donations are tax deductible, which would reduce your tax bill.
However, if you were to face the top rate of 37% on the full $707.9 million cash option, $261.9 million in all would go to the IRS, reducing your haul to $446 million.

State taxes — and sometimes local taxes — would also likely be withheld or due, depending on where you purchased the ticket and where you live. Those levies can range from zero to more than 10%.
Nevertheless, even if fully half of your winnings went to taxes, you’d still end up with roughly $354 million, which is far more than most people see in a lifetime.
Meanwhile, Powerball’s jackpot is $360 million ($188.7 million cash) for Wednesday night’s drawing. The chance of hitting the jackpot in that game is slightly better than with Mega Millions: 1 in 292 million.

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The IRS hasn’t announced the tax season kickoff for individual filers, but last year, the agency began accepting individual returns on Jan. 24.
In the meantime, experts suggest hiring a tax preparer, if needed, and getting organized with tax forms.
There’s still time to reduce your 2022 tax bill with a fourth-quarter estimated tax payment and individual retirement account or health savings account contributions.

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Enlist tax prep help

One of the first things to consider: Will you be filing your own taxes this year or tapping an expert to file a return on your behalf?
If you’re planning to hire a tax preparer, January is a good time to find someone, said certified financial planner Anna Sergunina, president and CEO of MainStreet Financial Planning in Los Gatos, California.
“Don’t wait till March,” she warned. “They most likely will not be taking on new clients that late in the tax season.”

For those eyeing tax software, it may be a good time to compare your choices, including IRS Free File, an option if your 2022 adjusted gross income is $73,000 or less.

Take steps to reduce your 2022 tax bill

While many tax planning opportunities vanish after year-end, experts say there are still a few ways to trim your 2022 tax bill.
“I believe there is tremendous value in thinking ahead and coordinating both your tax and financial planning strategies,” said Judy Brown, a CFP and senior financial advisor at SC&H Group in the Washington and Baltimore area.

I believe there is tremendous value in thinking ahead and coordinating both your tax and financial planning strategies.

Judy Brown
senior financial advisor at SC&H Group

For example, the fourth-quarter estimated tax payment for 2022 is due on Jan. 17, which may reduce your tax bill or minimize late payment penalties.
You can also still make individual retirement account contributions until the tax-filing deadline on April 18, 2023, said Brown, who is also a CPA. While Roth IRA deposits won’t provide a deduction, you may get a tax break with pretax IRA contributions, depending on your income and participation in a workplace retirement plan.
You may also score a 2022 deduction by making a health savings account contribution by the tax deadline, assuming you’re enrolled in an eligible health insurance plan. 

Get organized with a tax forms checklist

Ajay Kaisth, a CFP and principal at KAI Advisors in Princeton Junction, New Jersey, says it’s time to get organized with the tax forms needed for your 2022 return. 
“If you have not already done so, review last year’s records and create a checklist of the forms” you’re expecting, he suggested. Common forms may include a W-2 from your job and 1099-NEC forms for contract work, 1099-G for unemployment income, among others. 
With a brokerage account, you may also receive 1099-B for capital gains and losses and 1099-DIV for dividends and distributions. For deductions, you may have 1098 for mortgage interest, 5498 for individual retirement account deposits, 5498-SA for health savings account contributions and more.

You should wait to file until you have copies of every form you need. Known as “information returns,” a copy of these forms is sent to the IRS and the taxpayer every year. If your tax return doesn’t match the forms, the IRS system may send an automated notice, which may take time to resolve. 
“If you aren’t sure whether something is important for tax purposes, it is better to retain the documentation,” Kaisth added.

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