Thursday, January 17, 2013

"My Taxes Went Up... Already?"

We need to get this to the Fiscal Cliff! What could go wrong?I knew it was going to happen. My wife +Hellen Stevens opened her paycheck and immediately complained that her taxes went up. Wait a minute, you may be thinking, I thought taxes were only going up on rich people! I'm not making the big bucks why did my taxes go up?

Income taxes were raised by the American Taxpayer Relief Act (ATRA) signed into law on January 2nd, but only on those making $400,000 a year, or $450,000 for married couples filing joint returns.

The reason people are seeing their net paychecks reduced is because of what ATRA did not do: It did not extend the payroll tax reduction Congress put in place in 2010. The amount of withholding for the payroll tax for most people reverted back to the older, somewhat higher rate. It is again 6.2% for employees (matched by employers) and 12.4% for the self-employed. Happy New Year!