U.S. Didn’t Go Over the 'Fiscal Cliff:' So Why is My Paycheck Less this Year?
Did you notice a decrease in your paycheck come the New Year? You are not alone. The end of the social security tax holiday took effect in January and has many people asking “Why is my paycheck lower?” Lakeland Bank offers tips which may help you to make up the difference in take home pay and may even save you several hundred dollars a month. With careful planning and budgeting, you may actually come up ahead this year.
These 5 tips may help you adjust to a lower take home pay:
Tip #1: Evaluate your W-4 withholding and/or quarterly estimates to see if you can withhold less federal income taxes. Doing so would increase your monthly take-home pay, but would reduce your federal tax refund when you file your 2013 taxes. This option is recommended only for individuals who usually receive a tax refund. Evaluate your options with a tax professional before making any changes to your W-4.
Tip #2: If you are expecting to receive a tax refund for 2012, fill out your tax return as soon as possible. To receive your refund sooner, you can opt to have the funds electronically deposited to your checking or savings account. If you had earmarked this refund towards a big-ticket purchase, consider saving it instead to meet the shortfall in your budget due to lower take home pay.
Tip #3: Life events such as a change in marital status, having a child, buying/selling real estate or stocks, and even changes in earnings may have a significant affect on your tax return. Have you experienced (or will you) any of these events and, if so, are you receiving the tax benefits/deductions that may go along with them? Meet with a CERTIFIED FINANCIAL PLANNERTM to make sure you maximize the financial benefits that go along with these events.
Tip #4: Keep track of credit card rates and bank fees. If you carry a credit card balance, switching to a credit card with a low APR and/or balance transfer fee may save you money. Most checking accounts now charge a monthly fee so find one with a low fee or one that offers others benefits that offset these fees.
Tip #5: If you have a mortgage, consider refinancing. Rates are at historic lows so refinancing your mortgage may provide some breathing room each month. The general rule is that if you can refinance one percentage point less than your current rate, then it may be worth refinancing. Speak to a residential mortgage consultant to find out if this is a good option for you.
Here is why your paycheck may be lower this year:
What changed? For 2011 and 2012, wage earners were granted a payroll tax holiday to stimulate the economy and paid 2 percentage points less in Social Security tax. On Jan. 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 (H.R. 8). This legislation does not include an extension of the 2 percent payroll tax cut for the Social Security (FICA) employee tax.
What does this mean for you? Starting Jan. 1, 2013, Social Security tax withholding rates for employees returned to the original level of 6.2% (up from 4.2%). The total taxable wage amount has also increased from $110,100 to $113,700 wage base. Of the approximately 163 million workers who will pay Social Security FICA taxes in 2013, nearly 10 million will pay higher taxes as a result of the increase in the taxable maximum, according to the Social Security Administration .
How much will it cost? As an example, workers earning $40,000 (average annual income) will see about $67 less in their monthly paychecks, $800 for the year. Additionally, self-employed individuals will need to make quarterly payments using the combined Social Security and Medicare tax of 15.3% in 2013. Try this Wall Street Journal Calculator to estimate out how much additional Social Security tax you will pay in 2013.
Obama For Ya
7:43 am on Wednesday, March 6, 2013
Get used to it - this is just the beginning. Did you really think Obama was telling the truth? Hope you like the Change!
VietNam Vet
3:32 am on Saturday, March 9, 2013
Yeah, because thats all they are going to have left because he isn't done spending yet!
Nucky Thompson
10:56 am on Wednesday, March 6, 2013
I love the change! The stock market (Dow) has doubled in the last four years and my investments are making me smile, thank you very much!
Tugwalla
8:47 pm on Wednesday, March 13, 2013
The reason the market went up is because corporation laid off workers, froze pay increases and sent their jobs to China.
Brian Burns
10:12 pm on Wednesday, March 6, 2013
No one going to stand up and say NO! We all will just keep paying more. Love the change.
VietNam Vet
3:56 am on Saturday, March 9, 2013
Death Of America
The United States of America passed away on Nov. 06, 2012 with an almost silent whimper. She was 236 years old. The Grand Old Lady died of neglect, stupidity, arrogance and pure abuse at the hands of both her leaders and its ignorant populace. She will be survived by the Socialist Democratic Republic of Obamerica or the SDRO.
Also killed in this same massive, catastrophic, progressive wreck were personal freedoms, American values, exceptionalism, The Constitution, economic growth, conservatism, fiscal sanity, American unity, free markets, lifes sanctity, marriage between man and woman, Republicanism, free will, self reliance, and many more are so mutilated as to be unrecognizable any longer.
Born: July 04, 1776
Died: November 06,2012
FourScore
10:52 am on Saturday, March 9, 2013
Nice try Vet, but utter rubbish. Abortion has been legal for 40 years now, same-sex marriage was first legalized in Massachusetts in 2004, the economy hit the skids back in 2008, and politically; American unity hasn't existed for some time now (remember the 2000 election, where the popular and electoral votes were split???). Furthermore, if you're so concerned about the constitution, then where were you when the Patriot Act was passed in 2001? When the Supreme Court declared that NSA wire tapping can be allowed? Back then, President Bush was taking necessary measures to keep America safe... today, Obama is destroying the constitution.
Gobsmacked
1:07 pm on Saturday, March 9, 2013
FourScore, you and VietNam Vet are both rubbish dealers. "Back then, President Bush was taking necessary measures to keep America safe... ", oh, he was, was he? What's your justification of the U.S. invasion and occupation of Iraq?
FourScore
3:30 pm on Saturday, March 9, 2013
You missed my point... I was speaking from the hypocritical point of view of people like VietNam vet. Conservatives like him are now very concerned about the erosion of constitutional rights now that Obama is in office, but during the Bush years, they defended these federal usurpations, such as the Patriot Act, wire tapping, random searches, etc. That's what happens when you vest the government with sweeping power... it doesn't go away when control switches from one party to the other. Obama is simply running with the ball that Bush handed off to him.
Loyal American
3:04 pm on Saturday, March 9, 2013
W.W., If not us, who? If not then, when? Is there any question Sadam Husain killed his own innocent people? Is there any question Sadam Husain supported terrorists? The world stood by and watched Hitler carry out crimes against innocent people. Are you suggesting we should again just watch? Until the recent shift towards socialism/liberalism, the US was the greatest nation on earth. With that comes responsibility to help those who can not help themselves. True patriots would know this.
FourScore
3:36 pm on Saturday, March 9, 2013
Bull! The premise necessitating the invasion of Iraq was that Saddam Hussein had weapons of mass destruction that were a 'direct threat' (not potential threat) to the U.S. Bush even stated that if Saddam simply disarmed, then war would be avoided. There were no weapons of mass destruction, and therefore, no necessity to go to war (based on Bush's own words). All the other reasons came after the fact (when no WMD's were found).
g
4:43 pm on Saturday, March 9, 2013
Fourscore,
The Iraq Liberation Act of 1998 is a United States Congressional statement of policy calling for regime change in Iraq. It was signed into law by President Bill Clinton, and states that it is the policy of the United States to support democratic movements within Iraq. The Act was cited in October 2002 to argue for the authorization of military force against the Iraqi government.
Representative Benjamin A. Gilman (Republican, NY-20) introduced the H.R. 4655 on September 29, 1998. The House of Representatives passed the bill 360 - 38 on October 5, and the Senate passed it with unanimous consent two days later. President Clinton signed the Iraq Liberation Act into law on October 31, 1998.
The U.S.-led coalition in Iraq dropped far more bombs during the sunset of Bill Clinton�s presidency than under President George W. Bush in the run-up to war in Iraq, RAW STORY has found.
Between 1999 and 2001, the U.S. and British-led air forces in Iraq dropped 1.3 million pounds of bombs in response to purported violations of the no-fly zones and anti-aircraft fire from Saddam Hussein.
g
4:54 pm on Saturday, March 9, 2013
Democrats wanted the war with Iraq over WMD:
"If Saddam rejects peace and we have to use force, our purpose is clear.
We want to seriously diminish the threat posed by Iraq's weapons of mass destruction program."
President Clinton, Feb. 17, 1998\\
"We know that he has stored secret supplies of biological and chemical weapons throughout his country."
Al Gore, Sept. 23, 2002-
"We have known for many years that Saddam Hussein is seeking and developing weapons of mass destruction."
Sen. Ted Kennedy (D, MA), Sept. 27, 2002-Truth!
FourScore
8:32 pm on Saturday, March 9, 2013
Nice word-for-word cut & paste job from Wikipedia on the Iraq Liberation Act g, but there's one important piece of information you left out. The act only calls for the support of an Iraqi regime change, and specifically prohibits the use of military action on the part of the U.S.
"Nothing in this Act shall be construed to authorize or otherwise speak to the use of United States Armed Forces (except as provided in section 4(a)(2)) in carrying out this Act ."
http://www.iraqwatch.org/government/US/Legislation/ILA.htm