OKLAHOMA CITY– As our country’s lawmakers worked on this last day of the year to come to a deal, many Americans wondered what going over the fiscal cliff would mean for them.
Local CPA’s have been warning their customers for weeks now to be prepared.
If we go over this fiscal cliff it could not only reduce the money you take home in 2013, but it could, in fact, result in less of a refund on your 2012 returns.
CPA Joshua Jenson said, “88-percent of Americans would be hit with some sort of tax increase.”
That’s the reality of the fiscal cliff.
Jenson says no deal means several things.
He said, “If you have a job and you make a wage, starting tomorrow there will be an additional 2-percent withheld from your paycheck for social security taxes.”
Beyond that, two-thirds of us would be hit by the Alternative Minimum Tax, known as AMT.
Jenson said, “It’s like a Twilight Zone tax that no one pays attention to. Why? Because Congress has always put a patch in place.”
While complicated to explain, if there is no AMT patch, you could end up paying more than you had expected to pay when you file your taxes for 2012.
Jenson said, “If you were planning on $3,000, you may only get $2,000 or $1,000.”
It could also mean a delay to file your taxes for 2012 and a definite delay on any refund.
Jenson said, “I do think that will be the one thing, I hope, that they solve today.”
No deal will also increase the regular tax rate.
Currently, the rates range from 10-percent to 35-percent.
No deal would increase those rates to 15-percent to 39.6-percent.
Also, those with kids who are used to the $1,000 per child tax credit would now only be able to get a credit of $500 per child.
Jenson says no deal will leave us all with less in our pockets.
He said, “I think the benefit to going off the cliff is only to Washington, only to those that want the tax rate to be increased.”
Jenson says if some sort of deal is reached it will likely impact the areas of payroll tax.
He said it could also impact that AMT patch and any issue that could delay people from filing their 2012 taxes.