For regular citizens, the fiscal cliff deal brings lots of changes to how our taxes will be calculated.
Paychecks are getting smaller. While many Americans are breathing a sigh of relief that their income tax did not increase, there is nonetheless a tax increase that will impact all paychecks.
The Social Security payroll tax rate was reduced for 2011 and 2012, with the employee contribution cut from 6.2 percent to 4.2 percent. The intent was to put more money in people's pockets, thus stimulate spending. The rate will now increase to the former level, resulting in smaller paychecks for American workers.
If a person was fortunate enough to have received a pay raise, it's likely that this Social Security tax increase will wipe out most of it. Americans, particularly those already living on the financial edge, need to act fast to adjust their budgets accordingly.
To help consumers find extra money to offset the tax hike, the NFCC suggests exploring the following areas:
For help finding hidden money in your budget, reach out to a trained and certified counselor. To find the NFCC Member Agency closest to you, dial toll-free to (800) 388-2227, or go online to www.DebtAdvice.org. For assistance in Spanish, call (800) 682-9832.
Gail Cunningham serves as vice president of membership and public relations for the National Foundation for Credit Counseling (NFCC), Inc. based in Washington, D.C. During over two decades in the industry, she has provided one-on-one financial counseling to thousands of consumers, and reached tens of thousands more through hosting television shows related to consumer education on cable and network television, as well as writing a weekly financial education column that appeared in multiple newspapers and online sites. She has been a featured financial expert for the nation’s top media outlets, including: NBC Nightly News, Good Morning America, the New York Times, the Washington Post, CNN, National Public Radio, USA Today, Newsweek, Forbes, Smart Money, MSN Money, Bankrate.com, the Associated Press, FOX Business Network and Bloomberg News.
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