New changes give you less money on payday
So while many are relieved Congress resolved the fiscal cliff, that sentiment could turn south once you get your paycheck.
The nation is off the fiscal cliff, but we'll still feel the impact.
The bottom line is tax rates are not going up for everyone under the fiscal cliff agreement, but paychecks will be smaller -- starting with your next one.
Idaho Falls accountant Daniel Packard said at the start of each year, his office at Cooper Norman is full of people waiting to get their finances in order.
"They're concerned of the implications that legislation will have on their personal tax liabilities," said Packard, a certified public accountant. "We're all planners, we all hope to be able to forecast our income, and with such uncertainty, it scares people."
The payroll tax cut helped many Americans keep a little more cash in their wallets, but now that the rate is going from 4.2 percent back up to 6.2 percent, the difference could add up quickly.
Basically, if you're making $30,000 a year, you'll pay around $50 more a month in taxes. If you're earning in the $50,000 ballpark, that hikes up your taxes to $83 more a month. And if you make $113,700 a year, you'll pay almost $190 more in taxes.
"The biggest change comes for people that are in the higher income tax brackets," said Packard. "There were a lot of provisions, fewer deductions they can take, fewer credits they can take, and higher tax rates."
Packard said the average person won't see a huge difference with these changes, but if you're able to, finding an accountant that can help you navigate through all of it could make your life a little easier.
"The tax law isn't getting any less complicated," said Packard. "It's getting more complicated. It requires average people like you and me to start planning."
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