Falling off the 'Fiscal Cliff' could cut your first paycheck of the year

Thursday, December 27, 2012 - 5:57pm

If a deal on the fiscal cliff isn't reached soon you could be seeing some unwelcome tax increases on your next pay check.

"Social Security taxes, it's going to be 2% (deducted) from the first dollar they earn. So you can subtract 2% right off the bat,” explained Louis LoBue, a CPA and tax partner at TWRU in Baton Rouge.

For the average American family that tax increase is estimated to be anywhere between a $100 and $400 deduction on your first pay check of the year.

"Me, myself, I know I can't afford $100 taken out of my check. Myself, now I know I can't speak for someone else. But I know I can't afford it," said Cynthia Johnson, a Baton Rouge resident.

"A hundred dollars is ridiculous. I don't have a hundred dollars to give, you know, as far as tax increases and everything. But, I’ll figure something out," exclaimed, Arlisa Salisberry, a mother of three.

"My concern is, whether I can afford it or not really is not relevant. It's just totally unnecessary in my opinion," Wanda Rockett of Baton Rouge added.

While most middle-class Americans are going to have to re-work their budgets if a deal isn't reached soon, even if a solution is offered up in the next few days the sting of the fiscal cliff fight will be felt well in to next year, especially for those hoping to file tax returns early.

"The IRS needs to know what the law is before they can prepare forms for all of us to use and file in our returns. If congress and the president don't act soon, then they're going to be waiting longer to get those refunds," LoBue explained.

LoBue said there does seem to be one silver lining, most employers have decided they are going to continue to follow the 2012 tax rules for withholding employees taxes, at least for the first few weeks of the new year.
 

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