By: Amanda Wilson
The tax legislation has not been updated but here is a recap originally posted January 2013
Anyone who has read or watched the news in the last few weeks knows that federal taxes were set to increase automatically on January 1 , and that Congress and the President reached a last minute deal that was touted as keeping us from going over this fiscal cliff. The question is – did it?
While it is true that the tax deal did prevent tax rates from increasing on ordinary income, dividends and capital gains for most taxpayers (generally, those taxpayers who made less than $450,000 (married) or $400,000 (single), Congress and the President allowed several other tax increases to go into effect. These increases include (1) a 2 percent increase in employee payroll taxes, (2) a 3.8 percent tax on net investment income for higher income taxpayers; and (3) a 0.9 percent increase in the Medicare tax rate for higher income taxpayers. In short, the tax deal was only a partial fix, and many taxpayers will be facing increased federal taxes. For many of these taxpayers, they will start seeing this increase on their first paycheck [of 2014].
For a more complete discussion of the recent tax legislation, please go to: http://www.lowndes-law.com/publications-presentations/1360-a-brief-explanation-american-taxpayer-relief-act-of