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Don’t Get Too Comfortable: Prepare for Higher Taxes in 2013

Dec. 22, 2012 8:22pm Becket Adams

Americans Shouldnt Get too comfortable With Jan. Pay, Higher Taxes on Their Way

President Obama making a case for action on “fiscal cliff” legislation at the Rodon Group manufacturing facility, Nov. 30, 2012, in Hatfield, Pa. (Jessica Kourkounis/Getty Images)

WASHINGTON (TheBlaze/AP) — Workers probably won’t feel the full brunt of next year’s tax increases in their January paychecks, but don’t be fooled by the temporary reprieve.

No matter what Congress does to address the year-end fiscal cliff, it’s already too late for employers to accurately withhold income taxes from January paychecks, unless all the current tax rates remain unchanged, which is an unlikely scenario.

Social Security payroll taxes are set to increase on Jan. 1, so workers should immediately feel the squeeze of a 2 percent cut in their take-home pay. But as talks drag on over how to address other year-end tax increases, the Internal Revenue Service has delayed releasing income tax withholding tables for 2013.

President Obama has insisted on tax increases on “the wealthiest.” (Olivier Douliery / Bloomberg-Getty Images-pool)

As a result, 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.

If employers don’t withhold enough taxes in January, they will have to withhold even more taxes 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.

The tax increases could be steep. If Congress fails to act, workers at every income level face significant tax increases next year as part of the year-end “fiscal cliff.”

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 every two weeks, that’s about $92 a paycheck, on average.

Someone making between $75,000 and $100,000 would get a tax increase averaging nearly $3,700. If the worker is paid every two weeks, that’s about $142 a paycheck.

O’Toole said it would take most employers two weeks to four weeks to update their payroll systems, once new tax withholding tables are released. For some small businesses, it could take longer.

The Obamas arrived in Honolulu, Hawaii, early Saturday morning. He has said he will rush to Washington if a deal is struck. (Getty Images)

“Employers can’t really just come up with withholding tables on their own, depending on what the rates are,” O’Toole said. “The smaller companies that do not use a payroll processing service probably would have more problems than anyone else.”

On Friday, the IRS said it plans to issue guidance by the end the year, though it won’t be early enough to affect paychecks in early January.

“We are aware that employers have questions with respect to 2013 withholding,” the agency said in a written statement. “Since Congress is still considering changes to the tax law, we continue to closely monitor the situation. We intend to issue guidance by the end of the year on appropriate withholding for 2013.”

About three-quarters of taxpayers got tax refunds this year, averaging $2,707, according to the IRS. That gives most taxpayers some leeway to manage their income tax withholding. However, many people rely on tax refunds to pay bills or make major purchases.

Speaker of the House John Boehner talks with reporters after the weekly House GOP caucus meeting at the U.S. Capitol, Dec. 12, 2012, in Washington. (Chip Somodevilla/Getty Images)

“The reality is, the vast majority of Americans do live paycheck to paycheck and that tax refund is their most significant payday of the year,” said Bob Meighan, vice president of TurboTax, an online tax preparation service.

Most of the expiring tax breaks were first enacted under President George W. Bush and extended under President Barack Obama. Obama campaigned for re-election on extending the tax cuts on incomes below $200,000 for individuals and $250,000 for married couples. Obama would let the tax cuts expire on incomes above those amounts.

In negotiations with House Speaker John Boehner, Obama offered to raise the income threshold, limiting tax increases to those making more than $400,000. Boehner, who has argued for years that the tax cuts should be made permanent for everyone, responded by trying to push a bill through the House that would have let many of the tax cuts expire on incomes above $1 million.

Many Republicans revolted and Boehner, R-Ohio, shelved the bill, sending lawmakers home for the Christmas holiday and leaving the outcome of talks in doubt as the new year approaches.

If Congress and the White House cannot reach a deal, income tax rates would go up, estate taxes and investment taxes would increase, and the alternative minimum tax would hit millions of middle-income people. A temporary payroll tax cut that has benefited nearly every wage earner in 2011 and 2012 expires, costing the average family an additional $1,000 a year by itself.

John Boehner and President Obama are negotiating a deal to avoid the “fiscal cliiff.” (Getty Images)

In addition, dozens of other tax breaks for businesses and individuals that are routinely renewed each year already expired at the end of 2011. Congress was expected to renew many of them by January, so taxpayers could still claim them on their 2012 tax returns.

If Congress doesn’t act on those tax cuts, businesses would lose a popular tax credit for research and development as well as generous tax breaks for investing in new plants and equipment. Individuals would lose federal tax breaks for paying local sales taxes, buying energy efficient appliances and using mass transit.

In all, taxes would go up by about $536 billion next year.

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Featured image courtesy shutterstock.com

In CONTROL, Glenn Beck presents a passionate, fact-based case for guns that reveals why gun control isn’t really about controlling guns at all; it’s about controlling us. Find out more HERE.

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Comments (86)

watashbuddyfriend
Posted on December 23, 2012 at 9:01am
On vacation, AGAIN, at taxpayer expense!

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- Jay1956
  Posted on December 23, 2012 at 11:00am
  He needs to stay on vacation.
  
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- 65Mustang
  Posted on December 23, 2012 at 2:12pm
  I hope he and his ghetto family never come back…despise everything about them.
  
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scrapadapolis
Posted on December 23, 2012 at 7:54am
Hurry up with that gun grab Obama,Were looking to bring America back to where she was.On top and Proud.

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Deane
Posted on December 23, 2012 at 7:17am
Wow, after 36 months of being unemployed, over 1000 job applications, no interviews, a foreclosure, a bankruptcy and dwindling savings, I sure wish I had a job to pay taxes and support those ( unlike myself) who have their hand out for all that Obama cash…..and yes I voted for Romney.

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- SolitudeBliss
  Posted on December 23, 2012 at 9:22am
  As a small business owner I wish I had a job to offer you but with the economy the way it is, the looming taxes, we business owners are just holding are own trying to keep our businesses afloat. I feel for you and for all of us. :-(
  
  Report this comment
- nomemymine
  Posted on December 23, 2012 at 9:37pm
  Deane, Please get all of the help you can get from the government. Take detail notes and record daily interactions with The System. You can write a book about it, you can tell us about it.
  
  In order to win, we must know and understand our Opponent. – Sun Tzu
  
  Report this comment
- nomemymine
  Posted on December 23, 2012 at 9:53pm
  Deane,
  http://rtw.heavengames.com/history/general/Alaric/Alaric
  “One of the generals at the battle was Alaric, the future leader of the Goths, but was taught in Roman ways. So when he gained leadership of the Goths, he would change their place in the world. ”
  
  Alaric grew-up in Rome as a child slave, so he knew the system.
  
  Report this comment
- Cavallo
  Posted on December 24, 2012 at 11:20am
  Broaden your search, start looking overseas for work. Working two jobs now, my graduate degree is required in neither. I’ve started to look abroad to find a position that will utilize my education.
  
  Report this comment
- DblJ
  Posted on December 25, 2012 at 11:28pm
  There with you, brother!
  
  Report this comment
HoratiusAtTheBridge
Posted on December 23, 2012 at 3:34am
Well… higher taxes only until the dollar is finally recognized by a major country as the fancy toilet paper that it has become, then the economy dies practically overnight. Can’t be stopped by now – take 100% of everyone’s wages and it wouldn’t make a dent. But pausing, didn’t that egomaniac, bug-eyed grinch-grinning, Mussolini-strutting, big eared piece of stuttering crap repeatedly and arrogantly – and repetitively proclaim that only the “wealthiest Americans” will see their taxes go up? LOL I am so happy that I have sold all of my “stuff” for firearms, magazines for them and a poop-ton of ammunition. I can relocate, build a homestead, grow food, hunt and fish. I can defend these things and my family. I sleep good even as the REAL cliff approaches. How about YOU? De-crapify your life in order to save it: sell the junk and buy a chance at a future. Weapons, ammunition, tools, gardening tools… do it today – be here for next Christmas – this one shouldn’t distract us!

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Eyeball
Posted on December 23, 2012 at 3:18am
Thanks for nothing Democrats and you Ron Paul people who didn’t vote for Romney.

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- neverending
  Posted on December 23, 2012 at 12:46pm
  And many palinistas as well and of course lets not forget the evangelicals that just could not vote for a Mormon! It is beyond sickening.
  
  Report this comment
- Fourthhorseman
  Posted on December 23, 2012 at 6:33pm
  Democrats yes, but don’t blame the Ron Paul supporters. We wouldn’t be in this mess if you Romney supporters voted for Paul last time.
  
  Report this comment
Skrewedretiree
Posted on December 23, 2012 at 2:40am
Hey: They voted Democrat. They voted Union. They voted for Public Schools. They voted for everything that would be what we are today.

It’s called Socialism. Get used to it. The United States of America is HISTORY!

It is now the Peoples Democratic Republic of America. Just another communist country.

It will be complete when they pass gun control and disarm the majority population.

Won’t everyone be surprised then…..?

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TheFrost
Posted on December 23, 2012 at 12:39am
Time to move all the federal power outside the constitution’s charter back to the individual states. This way we can vote with our feet.

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capnjack
Posted on December 23, 2012 at 12:24am
Obama, Americas’s very first “Peter Principle President”*

* An observation that in an organizational hierarchy, every person will rise or get promoted to his or her level of incompetence.

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- fdraiden
  Posted on December 23, 2012 at 12:30pm
  Don’t forget first titular POTUS!
  
  Report this comment
Clownzilla
Posted on December 22, 2012 at 10:56pm
“However, many people rely on tax refunds to pay bills or make major purchases.”

We live in a land of complete idiots. Yes, let’s give the government more money than we need to (interest free) so we can just get our money back at the end of the year so we can feel good about getting a check with big numbers on it. I never understood why so many people think this way.

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- mlip
  Posted on December 23, 2012 at 12:08am
  Right on clownzilla! I have been trying to explain this to my employees for quite a while, and they still can’t get it! Thanks public education!
  
  Report this comment
- sasquatch08
  Posted on December 23, 2012 at 3:08am
  @clownzilla
  
  You’re absolutely right, all that you do if you get a big refund is give the government an interest free loan for the year.
  
  Report this comment
- NoLongerNonPlussed
  Posted on December 23, 2012 at 10:54pm
  Stop being so silly.
  The majority of the checks are rebate checks to the 47% that never paid any taxes in the first place. It’s an American blessing, practically an entitlement, when the “poor” can hit the IRS rebate lottery for $15K to 20K every year just like clockwork. Of course, when they get the check from our taxes, that’s when they make their BIG consumer purchases. or if we’re lucky, pay part of their credit card bills.
  
  TEA
  
  Report this comment
breakobamanow
Posted on December 22, 2012 at 9:43pm
When you have no money, no home, no food; what will you eat or who will be kind and feed you?

John 6:57-59 (KJV)
As the living Father hath sent me, and I live by the Father: so he that eateth me, even he shall live by me.
This is that bread which came down from heaven: not as your fathers did eat manna, and are dead: he that eateth of this bread shall live for ever.
These things said he in the synagogue, as he taught in Capernaum.

Jesus was refering to his free gift of salvation and his word. Those who drink of this water shall never thirst. They will not hunger, cry, suffer in pain, nor feel heat or cold. Bless God for his wonderful mercy and grace.
Proverbs 3:5
Trust in the LORD with all thine heart; and lean not unto thine own understanding.

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ldaopines
Posted on December 22, 2012 at 9:32pm
One big, happy, corrupt, overpaid, elitist, growing government body living off the rest of us and ensuring their continued place at the trough by feeding their constituents OUR money.

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Leveraction3030
Posted on December 22, 2012 at 9:14pm
This is a scam. Your step aunt does not even work. She gets EBT, welfare and has an Obamaphone just like you do b1^c#. Go back to Nigeria and take your Kenyan leader with you. Take the rest of the family to. Related or not and theones who you do not know who the daddy is. LOSER.

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breakobamanow
Posted on December 22, 2012 at 9:10pm
Joel 2:21
Fear not, O land; be glad and rejoice: for the LORD will do great things.
Matthew 10:28
And fear not them which kill the body, but are not able to kill the soul: but rather fear him which is able to destroy both soul and body in hell.
Luke 12:32
Fear not, little flock; for it is your Father’s good pleasure to give you the kingdom.
Daniel 11:20-21
Then shall stand up in his estate a raiser of taxes in the glory of the kingdom: but within few days he shall be destroyed, neither in anger, nor in battle.
And in his estate shall stand up a vile person, to whom they shall not give the honour of the kingdom: but he shall come in peaceably, and obtain the kingdom by flatteries.

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- virgie morgan
  Posted on December 23, 2012 at 3:45am
  Thank you for trying…Bless your heart. We are so worried about having the money to prepare or get us through what lies ahead, but what lies ahead does not require money to sustain us. It requires God and a right spirit within us to get through it. No amount of money saved or spent will prolong our days one minute longer. Only God has all the provisions we need, all the strength and comfort. We would be wiser to store up His Word in our hearts where no man can take it away, for soon we will not even have the Bible to keep with us. Store up God’s word in your hearts and trust in Him.
  
  Report this comment
The_Almighty_Creestof
Posted on December 22, 2012 at 9:09pm
I fully expect the IRS to double in size as it hires an army of auditors to go over tax returns for all the people cheating on them in order to reduce payments and increase refunds.

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reality based lifeform
Posted on December 22, 2012 at 9:08pm
that one family picture looks like the Obama’s are vacationing on “The Love Boat ” with Captain Stubing

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- DesertRose1960
  Posted on December 22, 2012 at 10:11pm
  I think you’ll find that “Captain Stubing’ is a three or four star Admiral in the Navy. He’s probably the Pacific Fleet Commander or something along those lines. Which means he probably has at least 30 years of service to his country under those epaulettes. I thought you folks were supposed to support our troops….or are Admirals not good enough for you to respect?
  
  Report this comment
- Skrewedretiree
  Posted on December 23, 2012 at 2:42am
  I served my country, and smiling Democrat Admirals are no reason for me to feel proud. His nest is padded at MY expense!
  
  Report this comment
- Halloween
  Posted on December 23, 2012 at 3:30am
  Yes, that Admiral is a water boy for the administration. Another politician licking the hand that feeds him and ******** on those below him.
  
  Report this comment
RIGHTWINGHATEMACHINE
Posted on December 22, 2012 at 8:57pm
Thanks a lot retublicans.

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- seeker9
  Posted on December 22, 2012 at 10:43pm
  You libs sure DO like the Bush tax cuts! Even more than Bushies.
  
  Report this comment
kickagrandma
Posted on December 22, 2012 at 8:56pm
Why worry?

DON’T PAY THEM!

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- Anonymous T. Irrelevant
  Posted on December 22, 2012 at 9:48pm
  ENCINIDIOT
  It’s no wonder nobody likes you on this site, and I would hazard to guess, other places, too.
  Nobody taught you to respect your elders? I guess it was because nobody could stand to be around you long enough to tell you.
  Merry CHRISTmas!
  
  Report this comment
- whatthecrazy
  Posted on December 22, 2012 at 10:16pm
  @encinom your ****** is waiting for you in hawaii:)
  
  Report this comment
- Digerati
  Posted on December 23, 2012 at 12:25am
  So it is now “hating America” to want to keep the rewards of your own labor? There’s some simpleton thinking going on there, I do believe.
  
  Report this comment
- Skrewedretiree
  Posted on December 23, 2012 at 2:50am
  @ENCINOM – Tea baggers, as you spit it out, do not hate America. The Tea Party believes in limited government and responsible, well reasoned taxation. We believe in taxes, since that is the mainstay of a responsible government.
  However, we do NOT have a responsible government. We have had 60 years of Democrat control of the government either by the Executive or the Legislative and Supreme Court branches. So, we find ourselves in our present condition.
  
  What makes it worse is dealing with repeat contributors to the Leftist vomit like you.
  
  Report this comment
- HoratiusAtTheBridge
  Posted on December 23, 2012 at 3:41am
  I wish ENCINOM would stay flushed… it just keeps bobbing back up out of the toilet drain pipe, surfacing and drifting about once more for all to smell. I didn’t say “he” or “she” because poop is inanimate. Well it’s supposed to be – this big nugget has somehow learned to use a keyboard…
  
  Report this comment
- Walkabout
  Posted on December 23, 2012 at 8:53am
  encinom
  Enjoy prison you arse
  ***
  It is one thing to say that 5% of your earning are going to be taxed & one of the resons is because 10% of the people are poor.
  
  It is anything to say that you are going to tax over 50% of a persons earning & oh by the way 50% of the people are on some form of welfare.
  
  The latter is not right.
  
  ***
  After 3 generations on the War on Poverty & supporting someone from the womb to the tomb, you would think that any of their children would have had food, clothing, shelter & an education. As such you would expect that they would all be working & not on welfare.
  
  Well, the left has failed the left, the right & the apolitical.
  
  Report this comment
- LIBSALWAYSLIE
  Posted on December 23, 2012 at 3:32pm
  ENCINOM, the real question is why do you chose to be an ignorant blind fool?
  
  Report this comment
paulusmaximus
Posted on December 22, 2012 at 8:55pm
We all know the song and dance! The socialist democrats in Washington have all the help they need to blame the hard working people of this country for having too much.I have already heard this was all set in motion by Bush.I have had all I can stand of lazy people demanding what little I have left.

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LeadNotFollow
Posted on December 22, 2012 at 8:54pm
Obama loves to use doom and gloom scare tactics.
He thought he could get everything he wanted passed, right here at Christmas.

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- LeadNotFollow
  Posted on December 22, 2012 at 9:00pm
  The Government never does anything that benefits the American citizens. Only themselves.
  
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LeadNotFollow
Posted on December 22, 2012 at 8:48pm
Look at Obama’s evil creepy red eyes, in the family photo.
I truly believe he is the antichrist.

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- LeadNotFollow
  Posted on December 22, 2012 at 8:58pm
  Obama has never even been asked to explain his weird ring with what looks like serpents on it, that he has worn ever since college.
  
  Report this comment
- Pat Alexander
  Posted on December 23, 2012 at 1:22pm
  The Anti-Christ won’t need a teleprompter to speak without uh,uh, uh……
  
  Report this comment
Tri-ox
Posted on December 22, 2012 at 8:44pm
Well, obama claims to have a mandate for across-the-board tax increases – that is exactly what he ran on, and why he was re-elected – so, of course we should expect him to raise taxes.

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Snowleopard {gallery of cat folks}
Posted on December 22, 2012 at 8:35pm
One thing you can be assured of, no matter how taxes increase, the Democrats, leftist special interest groups and unions, and individual high-income donors (read: bribery experts), will not suffer any increase on their taxes. More loopholes and such will be made available for them to funnel yet more funds into the Democratic parties hands.

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- progressiveslayers
  Posted on December 22, 2012 at 8:43pm
  That’s right the lawbreakers are experts at carving out exemptions for themselves and their cronies.The ruling class will not toil under communism the rest of us will.
  
  Report this comment
Politijack
Posted on December 22, 2012 at 8:35pm
Incoming fiscal cliff!

They want it to happen ,repubs want the spending cuts and the Obamunists want the higher taxes on all.

Homecoming,chickens,roost,,you know the drill….

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progressiveslayers
Posted on December 22, 2012 at 8:34pm
The progressive POS never saw a tax he didn’t like so just accept it taxmageddon is coming courtesy of the maniacal Marxist POS. The lawbreakers think they’ll take in 536 billion next year huh? They never take in what they project and even if they did it’s not enough,it’s never enough for those progressive pukes.Government takes money in and wastes it on BS social programs and expands the size of government. If you think health care is expensive now wait until you see what it costs when it’s ‘free’.

The ‘fundamental transformation of America’ is on us,promised by a Marxist POS who has no idea what it means to be an American and we’re all going to pay dearly for that bastards sick twisted agenda.

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- Winedude
  Posted on December 23, 2012 at 12:44am
  My my, such a hateful individual…obviously not a Christian, at least not like Jesus would have preached. As for myself I’m quite happy to pay a bit more in taxes to see sequestration take place. It’s obviously the ONLY way we have to cut into the bloated defense budget. Thank the “compassionate conservative” Geo. W. Shrub, for getting us involved in two wars, both of them off the books. I’m plenty good with cutting some entitlements to bring things into balance. Moreover, no state should have to pay more to the feds than it gets back in federal benefits. I’m sick of sending my hard earned money to MORONS in the south and midwest…
  
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- progressiveslayers
  Posted on December 23, 2012 at 8:40am
  You’re still spewing your bigoted BS against the south and Midwest,you obviously have issues.Why would you want to pay more to government? They’re just going to waste it on social BS programs and expand the size of government.The morons are in the worthless union controlled POS blue states and DC. End of lesson.
  
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styvesra
Posted on December 22, 2012 at 8:31pm
So–the Bush tax rates that were once demonized by the left as benefiting “only” the rich actually benefitted all of us. Now that they are aboutto expire and hammer everyone the left has changed it’s tune and now touts those rates as necessary and worthwhile. Talking out of both sides of their mouths seems to be the favorite pastime of liberals.

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- Snowleopard {gallery of cat folks}
  Posted on December 22, 2012 at 8:36pm
  Of course, remember that the truth is irrelevant to them unless it is of convenience.
  
  Report this comment

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