Off The Fiscal Cliff

On Jan 1, 2013 a host of changes will happen unless the Congress and President get a deal done.
Among those changes:

1. All of the Bush tax cuts expire. This will take tax rates back up to where they were under President Clinton.

2. $100 Billion in automatic spending cuts will be instituted. Half coming from the DoD and the other half from domestic spending.

3. Authorization for extended unemployment benefits (beyond the first 26 weeks) will end.

4. Medicare providers will see a reduction in their payment rates.

5. That 2% point reduction in SS withholding expires.

This is all the result of the debt ceiling/budget deal made last year. The idea was they would do another deal before the end of the year. That hasn’t quite worked out

So here is what to expect if the dum-dums in DC don‘t do a deal.

1. Social Security withholding will go up even if your salary doesn’t.

2. Federal Income tax withholding will go up.

3. If you are on unemployment and have already used your first 26 weeks of benefits, current benefits will stop at the end of your current extension.

4. If you are a school teacher, the annual tax credit for supplies you purchase for your classes will not be available on your 2012 tax return.

5. If you are a Medicare provider, your reimbursement rate will be reduced.

6. If you work in the Defense industry, your job may be at risk.

Have a Happy New Year