Fiscal Cliff: What It Means For My 2013 Paycheck?

The financial deadline looms in Washington, with no deal yet made. Check this primer, and share your questions and thoughts.

With Christmas 2012 over, one reality check is that the looming "fiscal cliff" deadline is just a few days away. 

On December 31, tax cuts dating to the George W. Bush presidential term are scheduled to expire, and President Obama and congressional leaders have not reached a compromise.

Of course, that means tax bills would increase for many middle- and upper-class taxpayers. And that means paycheck withholding for many workers would change, leaving them with less take-home pay in the new year.

Apparently, though, there will be no immediate change in withholding tables, while the situation is unresolved.

According to John Tuzynski, the IRS’ chief of employment tax policy, employers should continue to use 2012 withholding tables and personal exemption amounts until further notice.

And cnbc.com reported that employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year, said Michael O'Toole of the American Payroll Association.

However, a caveat: If employers don't withhold enough taxes in January, they will have to withhold more later in the year to make up the difference. Otherwise, taxpayers could get hit with big tax bills, and possibly penalties, when they file their 2013 returns.

If no compromise is reached by the president and Congress, the hit will be noticeable in many workers' paychecks.

A taxpayer making between $50,000 and $75,000 would get an average tax increase of $2,400, according to the Tax Policy Center, a Washington research group. If the worker is paid biweekly, that's about $92 a paycheck.

About 75 percent of taxpayers got tax refunds in 2012, averaging $2,707, according to the IRS. And many people rely on tax refunds to pay bills or make major purchases.

Tell us Cranford, do you think President Obama and Congress will reach a "fiscal cliff" deal? How would a tax increase affect your spending? Share your thoughts in the comments below.

gary bloodgood December 29, 2012 at 12:21 PM
There's only one thing that will change Washington . Get rid of of all of them in the next election We have no one to blame except ourselves .We put the same rich self serving bastards back in office over and over again. So who's the stupid ones . There's not an one oz . of I give a crap in Washington about the American people. That's what happen when youdon't hold people accountable for years and years.
michael donovan December 29, 2012 at 06:50 PM
hell if i new you were running for office i might just vote for you,,well said..and the sad thing is that all these people voting, thinking they are doing good..are only leaving a bigger bill for their children to pay ..and that's the god's honest truth...some people should not be aloud to vote,especiaaly when they don't even know what their voting for...it's crazy...
michael donovan December 29, 2012 at 06:59 PM
someone has to be willing to stop the spending..as harsh as it might be for some..the spending has to stop...again or our children will be footing the bill for our spending...the only thing everyone is doing is spending our children's money right now....cashing in on the backs of our youth..what a great country we are turning into...leave them the bills....it's really sad..most people don't really care about the future of their own children...some people should'nt be aloud to breed


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