‘Taxmageddon’ Looms at End of Payroll Tax Holiday | The Washington Post | Lori Montgomery | 2/18/12

taxes

taxes (Photo credit: 401K)

With high unemployment and a struggle economy, tax payers rely more heavily on their tax refunds. Though Congress voted to extend the payroll tax  holiday sparing 160 million workers from an immediate tax hike, this and many other tax “breaks” are set to end before 2013. The result, greater tax burden/ reduced tax refunds than expected.The following is a partial list of current tax breaks tax payers enjoy now but are set to expire on 12/31/12:

  1. The George W. Bush-era tax cuts are scheduled to expire, raising rates on investment income, estates and gifts, and earnings at all levels.
  2. The marriage penalty for joint filers re-activates.
  3. The value of the child credit will drop from $1,000 to $500.
  4. The rate everyone pays on the first $8,700 of wages will jump from 10 percent to 15 percent.
  5. The Social Security payroll tax will pop back up to 6.2 percent from 4.2 percent under the deal approved on Feb. 17, 2012 by Congress.
  6. New Medicare taxes enacted as part of President Obama’s health-care initiative will for the first time strike high-income households.

The Washington Post reports that “the potential shock to the nation’s pocketbook is so enormous, congressional aides have dubbed it ‘Taxmageddon.’ Some economists say it could push the fragile U.S. economy back into recession, particularly if automatic cuts to federal agencies, also set for January, are permitted to take effect.”

Whether “Taxmageddon” arrives may be up to the voting public and the outcome of the 2012 Presidential election.

For full article see: ‘Taxmageddon’ looms at end of payroll tax holiday – The Washington Post.

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About vinhsu

Center City Philadelphia General Practice Law Firm with emphasis on Criminal Defense, Family Law, Immigration, Real Property, and Wills/Trusts/ Estate Planning. Licensed in Pennsylvania and New Jersey.
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One Response to ‘Taxmageddon’ Looms at End of Payroll Tax Holiday | The Washington Post | Lori Montgomery | 2/18/12

  1. Pingback: Instant Tax Refunds On Their Way Out | The Washington Post | Ylan Q. Mui | 4/6/12 | Vinh P. Su, Esquire

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