Fiscal Cliff

Faust · Wakeboarder.Commie Joined: 20 May 2005 Posts: 1496

Alright financial experts... an idea popped in my head and I wanted to double check if it is sound:

Given the probability of a rise in income taxes in 2013, would it make sense to wait and pay my 2012 property taxes in 2013, so I could then deduct more from my income when I itemize? Thanks

Partyb · Posted: Dec 10, 2012 8:33 am Post subject:

Define "probability" specifically as it relates to your current income tax bracket.

ohsix · Posted: Dec 10, 2012 8:42 am Post subject:

If you make less than $250,000 per year, I would guess there's a 10% chance your taxes will increase. If you make more than $250,000 per year, there's a 70% chance your taxes will increase.

This is just my guess based on what I hear. Most of my information comes from Bloomberg News.

Faust · Wakeboarder.Commie Joined: 20 May 2005 Posts: 1496

So there is a 10% chance my income taxes will increase by ~3%.

goofyboy · Posted: Dec 10, 2012 8:58 am Post subject:

actually, the pay roll tax is set to expire and I don't believe that is part of the talks. Your SS tax will most likely go up 3%, unless they extend that rate as well.

jgriffith · Posted: Dec 10, 2012 9:07 am Post subject:

SS tax will go up 2%, but that has nothing to do with itemized deductions.

Faust, your best bet is to use a CPA for tax planning.

brew · Posted: Dec 10, 2012 9:32 am Post subject:

Faust · Wakeboarder.Commie Joined: 20 May 2005 Posts: 1496

jgriffith · Posted: Dec 10, 2012 9:53 am Post subject:

I am one of those, I guess what I am getting at is most people that work in the profession can't really give you specific planning advice without knowing a lot more details (too many variables to just through out a yes or no answer). People outside of the profession may give you advice that you shouldnt rely on.

Chattwake · Posted: Dec 10, 2012 10:28 am Post subject:

It's not just the overall income tax rate that people need to be concerned with. Payroll tax is set to go up, SS is set to go up, child care credits are set to be fazed out, the standard deduction system changes (for the worse) for those who are married filing jointly, unearned income is set to be taxed as ordinary income, etc. etc. etc. Even for those who bring in under 250k as a household, if nothing is done, it's going to be bad.

Nor*Cal · Ladies Man Joined: 12 Jan 2003 Posts: 9479 City: Sac

Fiscal cliff is a imaginary political term to create urgency to cut a deal.

goofyboy · Posted: Dec 10, 2012 12:41 pm Post subject:

um, there is an urgency to cut a deal as far as i am concerned. I would rather not have my tax rate increase for SS, nor for income taxes, while the assholes in congress can't grasp the fact that they spend too much money across the board.

jgriffith · Posted: Dec 10, 2012 1:08 pm Post subject:

I dont think the reduction in SS tax a couple years ago was intended to be permanent. I'm pretty sure that will go back to its normal rate.

I also dont think think most of the people in Washington believe that the problem we have is a spending problem rather than a revenue problem. Taxes are going up people, for everyone.

ohsix · Posted: Dec 10, 2012 1:23 pm Post subject:

The term I've heard is "Fiscal Cliff" which I understand to be tax increases coupled with reductions in government spending. While my feeble, microeconomic mind thinks this is exactly what we need to reduce national debt and reverse our nation's path toward insolvency, macroeconomics says this will kill the national economy.

The argument, again, as I understand it, by the political parties, is whether to extend the current tax policy (which are referred to as cuts, because their net effect is everyone pays less taxes) to all taxpayers, or only those making less than $250,000. The Republicans want to extend current tax policy for all taxpayers while Democrats want to only extend current tax policy to taxpayers making less than $250,000. The net effect of doing one or the other is negligible to the nation's balance sheet, but it's something for our elected representatives to fight over to make their constituents think they actually make a difference.

jgriffith · Posted: Dec 10, 2012 1:37 pm Post subject:

ohsix, I think it would add hundreds of billions in revenue. But if you are saying the more they bring in the more they will spend then yes, I agree, it will do nothing to the balance sheet.

Nor*Cal · Ladies Man Joined: 12 Jan 2003 Posts: 9479 City: Sac

jgriffith · Posted: Dec 10, 2012 2:17 pm Post subject:

I think the 2% payroll tax holiday was 2011 and 2012, but yeah before that it was the normal 6.2%

Nor*Cal, you dont think it will matter if they fix it retroactively as opposed to fixing it now? I'm not a payroll guy, but I would assume the employer will be required to withhold more correct?

Nor*Cal · Ladies Man Joined: 12 Jan 2003 Posts: 9479 City: Sac

jgriffith, exactly, payroll taxes will likely go up regardless but income tax is in play and can be corrected retroactively.

jgriffith · Posted: Dec 10, 2012 2:41 pm Post subject:

Nor*Cal · Ladies Man Joined: 12 Jan 2003 Posts: 9479 City: Sac

jgriffith, that's up to the employee not the business.

chavez · RIP MHL 04/25/1958 - 01/11/2006

jgriffith · Posted: Dec 10, 2012 3:40 pm Post subject:

brew · Posted: Dec 10, 2012 6:37 pm Post subject:

Withholding rates are based on how you fill out the W-4. Your status, deductions, and pay are used to calculate how much is withheld.

jgriffith · Posted: Dec 10, 2012 7:08 pm Post subject:

http://www.bnasoftware.com/News/Tax_News/Articles/Taxes_May_Not_Have_to_Rise_Immediately_if_Congress_Fails_to_Extend_Cuts.asp

goofyboy · Posted: Dec 11, 2012 3:51 am Post subject:

But, if you don't withhold enough, you can be hit with a penalty. I was close to that one year because we owed $4500. My wife and I both claimed 0 on our W-4.

Faust · Wakeboarder.Commie Joined: 20 May 2005 Posts: 1496

We're going over! Crying or Very sad

eeven73 · Posted: Dec 27, 2012 7:53 am Post subject:

Absolutely amazing to me the lack of coverage this is getting. The Sandy Hook tragedy has totally trumped it.

Saw some talking heads saying that it has been Barack's desire to go over the cliff the whole time. "Raising taxes and gutting the military are a Dem's wet dream", was what they were saying.

Faust · Wakeboarder.Commie Joined: 20 May 2005 Posts: 1496

The whole thing is pathetic and disgusting. The entire country is getting screwed, and the Reps and Dems are blaming each other the whole way. Nothing anyone can say about it because we all voted them in.

eeven73 · Posted: Dec 27, 2012 9:01 am Post subject:

nmballa · Posted: Dec 27, 2012 12:23 pm Post subject:

It sucks for my company and my taxes that we are going over the cliff but in my honest opinion the 1.2 trillion spending cuts is what this country really needs. The answer should not be raise taxes, the answer should be reel in the government spending. So I do find comfort in this fact as we plunge over the fiscal cliff.

RampageWake · Posted: Dec 27, 2012 2:37 pm Post subject:

Nmballa, my sentiments exactly.

Nor*Cal · Ladies Man Joined: 12 Jan 2003 Posts: 9479 City: Sac

Some news:

CBO Score of the Fiscal Cliff Agreement

The Price Tag: $4 Trillion Added to Deficit

Okie Boarder · Ladies Man Joined: 03 Mar 2008 Posts: 10056 City: Edmond

Bureaucracy 101. They did a great job of maintaining the status quo while giving us the illusion they were solving the problem.

chavez · RIP MHL 04/25/1958 - 01/11/2006

I'm just wondering...

If this had not been passed, how many of y'all were ok with the extra $$$ you would be paying? Would you have been pleased with the sequester forcing cuts along with your increased tax bills, or ?

Let's be real here - this likely meant each and every one of us would have had a significantly higher amount sent to the Treasury.

PS: Chris Christie is slamming the House GOP right now...

goofyboy · Posted: Jan 02, 2013 11:29 am Post subject:

I would have been pissed. I've said time and time again that I am taxed enough. There is already so much waste that the raising of taxes just gives them more to play with. The cuts should happen without the raising of taxes.

The military industrial complex is massive and does not need to be. There are federal departments that do not need to exist. etc. etc. etc.

I am even willing to compromise (HA!) and be ok with my taxes going up 1% if realy and meaningful cuts were made across the board. By real cuts, I mean cuts to the current budget. No more increasing of the fed budget. No 10 years down the road we will let the cuts take place. Real cuts now.

About the only good thing they did was fix the AMT issue with it keeping up with inflation. Of course, that is only good for us that are under $400k (or wherever it is now set).