The Fiscal Cliff and your Taxes Next YearDo you know that if Congress and President Obama do not agree on a compromise about taxes, you the average taxpayer will have to pay on the average about $2000 more of taxes next year.?
This is due to what newspapers are calling the Fiscal Cliff. This will occur because several popular tax credits and deductions along with the low tax rate will expire by the end of the year. So if Congress does not do anything before the end of the year, the taxes we will owe next year will average about $3,500 more per household, according to the Tax Policy Center. This means that the middle class tax payer are most likely to see an increase of $2000 in their taxes.
Other items which may increase your tax liability next year are:
1. Expiration of low capital gains rates and higher Dividends tax rate
2. Payroll tax Holiday will be over
3. Reduced Savings for Child care will take effect
4. Estate Tax rate will increase from 35 to 55%
5. Alternative minimum tax income exclusion must be approved retroactively
6. Higher income taxpayers who itemized will have a 3% reduction in their Schedule A Claims
7. Start of taxes related to Obamacare law
8. Reduced in Defense Spending
The whole country will be affected if this fiscal cliff occurs that economists are predicting another deep recession. However, California would be hit especially hard. A study by Professor Stephen Fuller at George Mason University shows that these cuts would cost California 230,000 jobs - 135,000 from the defense industry and 95,000 from non-defense sectors.
For additional details Read : http://www.bankrate.com/finance/taxes/fiscal-cliff-affect-taxes.asp
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