Paychecks to get smaller for Americans after tax cut expires - 13abc.com Toledo (OH) News, Weather and Sports

Paychecks to get smaller after tax cut expires

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13abc.com Amy Montgomery - bio | email

The nation may not have gone over the fiscal cliff, but the new deal will have millions of American workers seeing smaller paychecks.

"It could be much worse," Ron Gould, a certified financial planner, told 13abc.  "I think its going to surprise people."

In 2011, the President and Congress, put a payroll tax cut in place.  It lowered it to 4.2% down from 6.2%.  The idea was to give Americans some extra cash each paycheck to help boost the economy.  However, the tax cut expired Monday, meaning workers are shelling out more in payroll taxes, money that funds Social Security.

"So now, we're going to start paying again, but we still have to make up that one year of 2% less," Gould said.

Here is what that means for you.  If you make $50,000 a year, you'll pay an extra $1,000 in payroll taxes this year.

The bigger the paycheck, the bigger the amount.  People making $100,000 a year will pay and extra $2,000.

"When they get that first check and if you're in a position where you get paid the same, all of a sudden there's a chunk missing," Gould said.  "You're going to realize that."

Gould says the increase will also be felt economically, however, he insists it won't be drastic.

He also says if people have concerns about the fiscal cliff deal, they should look into talking with a certified financial planner.  Click here to find one in your area.

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