Home | Tax Blog | Tax Evaluation | Resources | Common Tax Questions | Back Taxes | Contact Us

Payroll Tax Increase Affects Household Budgets

January 9th

On Jan. 1, 2013, Congress approved the American Taxpayer Relief Act of 2012 which was signed by President Obama the next day. While the Holiday season is now over, so is the payroll tax break that expired along with the new agreement in Congress. As a result, Americans this week are seeing a tax on their paychecks rise from 4.2 percent to 6.2 percent.

Planning For Less To Spend

The 2 percent hike means that a person earning $30,000 will receive nearly $600 less this year, someone making $50,000 will receive about  $1,000 less, and someone earning $113,000 will take a $2,200 hit. Economists predict as the year moves forward, and although many saw small salary increases in 2011, disposable income for most households will shrink. There is bright news though that can help you anticipate your 2013 tax debt and offset some of the increase.

As part of the new tax act, the Alternative Minimum Tax patch has been permanently extended, which means 34 million middle-income families can still celebrate the New Year with a $3,700 credit. Other “Tax Extenders” have been approved allowing certain credits to remain in place like:  If you are a teacher, you can still claim up to $250 of classroom expenses for supplies, materials, books and software. College students or parents can once again deduct education expenses related to schooling, including tuition, books and other supplies, up to $4,000.

Previously, taxpayers who had mortgage debt canceled or forgiven after 2012 would be required to pay taxes on that amount.  Under the new law, up to $2 million of forgiven debt is eligible to be excluded from income in 2013.  Increased dependent care credits remain in place that allow you to claim up to $2,100 of your eligible dependent care cost for two or more children. However, if the new tax laws put you in a position of owing more than anticipated, the IRS has several tax debt payment plans to help.

 
 
RSS

Subscribe Now
Social

Follow on FaceBook
News & Events
Monday, August 01, 2011

We are excited to launch our new site LeeTaxHelp.com.
Monday, September 05, 2011

If you think you might be need the advice of a Dallas Bankruptcy Attorney you can view on sister site at http://leebankruptcy.com
Categories
Back Taxes (5) General Tax Information (65) News (39) Payroll Taxes (5) Tax audit (10) Tax Debts (3) Tax deductions (16) Tax Fraud (4) Tax Laws (14) Tax Liens (10) Tax payment plans (14) Tax programs (21) Tax Scams (6) Uncategorized (2)
Recent Posts
Advantages of Using a Tax Debt Lawyer
Tax Debt Relief In 2014
Tax Debt Installment Agreements
Understanding the Five Tax Debt Strategies
Back Taxes: What You Can Do
Archives
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011