How Will the Fiscal Cliff Affect Paychecks?
In the short term, employees may not see much of an impact but a bigger hit could come down the road.
If the country goes over the "fiscal cliff," how will your paycheck be affected? With just one day to go before fiscal cliff deadline, employees and employers are left to wonder what impact the lack of a tax legislation agreement between the White House and Congress will have. Employees will notice an immediate reduction in take home pay due to the expiration of the 4.2 percent Social Security tax rate on Dec. 31. The tax rate will revert to 6.2 percent in 2013. Other changes may not be noticeable for a few weeks. In the short term, the IRS will allow employers to continue withholding at the 2012 rates. However, should those rates change due to a failure in negotiations in Washington, any deficit in collection will be made up later in the …
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