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Quick question on potential big federal tax hike (non-political)


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Read this article on SFgate and the potential tax hike is more than my annual grocery budget :confused:

 

In the worse case scenario, would that be for the tax year 2012 or 2013? I just don't want to get a big shock when I file at the beginning of next year as that would mean I owe IRS tax instead of getting money back.

 

ETA: we are in the above $100k bracket just to put my question into perspective. We get less than $2k back every year.

I just want to budget for next year and it is compounded by state tax likely to be rising.

 

I read the whole article, just don't understand the jargon.

 

ETA: Thanks to all who replied. We will have to budget for the increase in payroll tax than to start with.

Edited by Arcadia in CA
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Read this article on SFgate and the potential tax hike is more than my annual grocery budget :confused:

 

In the worse case scenario, would that be for the tax year 2012 or 2013? I just don't want to get a big shock when I file at the beginning of next year as that would mean I owe IRS tax instead of getting money back.

 

It would go into effect in 2013 (returns submitted in April 2014).

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It's for tax year 2013, as far as I know. If your rates do go up, you'd want to change your withholding so you're not underpaying and hit with a huge bill. The payroll tax cut, which seems likely to disappear, means you'll see more taken out of your paycheck starting Jan. 1. (That's about 2%, I believe.)

 

Most people in the news seem to be saying that the income tax rate will not be raised on those making under $200,000 ($250,000 for a couple). For people who make less than that, it seems like the main hit is the loss of the payroll tax cut. (Assuming that Pres. Obama's plan for letting the income tax rates increase for the over-$250K group, but letting the under-$250K group keep the current tax rate, is approved.)

 

Wendi

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I would suggest reading the article in its entirety since the main point of it is that it is unlikely all of the Bush and Obama tax cuts will be allowed to expire.

 

:iagree:The only thing I think one is likely to see in early 2013 is the payroll tax back to it's regular rate. We've been under a temporary cut for about 2 years, which is set to expire. This funds Social Security, so it can't be a long term cut.

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