The biggest issue facing every American right now is the dreaded fiscal cliff. What is this fiscal cliff and what does it mean for me should be a question on everyone’s mind. Unfortunately, it is not. The public is rarely educated on the true meaning of any of these terms and although we live in the information age no one seems to know or care about where we are headed.
I do not spend a lot of time on tax law and discussion on it on my blogs. Why? Because it’s not important to a lot of people until April 15th and something went incredibly wrong. There was no refund or it wasn’t as high as they wanted or even worse they owe taxes. In my opinion the American people will not really know about the fiscal cliff until April of 2014.
By January 1st, 2013, we will have multiple tax laws that will expire. This will affect EVERYONE. Not just the so-called rich but every family, single person and business owner. You WILL be paying higher taxes. The media and politicians have done a very good job of informing us of the need for the rich to pay more but have not explained that everyone will be paying more.
At a minimum I expect that the payroll tax holiday will be going away for employees. This tax goes to Social Security and had for the time being been set at 4.2%. It will go back up to 6.2% on January 1st. After that, we are expected to go back to the Clinton tax rates which were approximately 3% higher for every single tax payer. Child tax credit will be lowered and the capital gains rate is set to go up to 20%.
In conclusion, from the brief explanation above you can see every category and age group is affected by these tax law changes. Workers, retirees and families will not be exempt from these changes and will trickle into small business. This is a warning to those who don’t pay attention really. You cannot be surprised or be mad at the messenger if you choose to ignore the fiscal cliff.
If you would like to calculate your tax possibilities for 2013 there are numerous calculators available. Here is one by the Tax Foundation a non-profit organization.
No surprises! We live in the information age. You need to educate yourself so you know what to expect for yourself.