Employers Start Bracing for Higher Tax Withholding

[geekgirldany]

Found a interesting article about the consequences on the bush tax cuts expiring:

http://www.bloomberg.com/news/2010-10-27/tax-debate-delay-has-employees-in-u-s-preparing-for-smaller-take-home-pay.html

[FEDUKE404]

But I thought.....

Found a interesting article about the consequences on the bush tax cuts expiring:

http://www.bloomberg.com/news/2010-1...-home-pay.html

But the POTUS has been telling us the evil "Bush tax cuts" only help those rich folks.

I'm confused!!

The folks in payroll/HR are certainly going to have a fun ride for the next six months or so......

FE

[dodgedipduck]

Advance EIC is gone too.

There are going to be some low income people in a world of hurt come January.

[Peachie]

Thanks so much.

Found a interesting article about the consequences on the bush tax cuts expiring:

http://www.bloomberg.com/news/2010-1...-home-pay.html

I will use this to draft an e-mail to my clients to give them a heads up just in case.

Peachie

[Bees Knees]

The article makes it appear that this will only affect the middle class and the rich. What the article fails to mention is that the lowest tax bracket of 10% goes to 15% January 1st. That means EVERY W-2 wage earner will have their withholding increase...not just the middle class or the rich.

[Peachie]

When I send my e-mail

The article makes it appear that this will only affect the middle class and the rich. What the article fails to mention is that the lowest tax bracket of 10% goes to 15% January 1st. That means EVERY W-2 wage earner will have their withholding increase...not just the middle class or the rich.

to my clients I will be letting them know that every wage earner is potentially affected and should stay tuned for further info.

Peachie

[Jiggers]

Other changes .....

The article makes it appear that this will only affect the middle class and the rich. What the article fails to mention is that the lowest tax bracket of 10% goes to 15% January 1st. That means EVERY W-2 wage earner will have their withholding increase...not just the middle class or the rich.

Doesn't the mariage penalty come back in 2011?

In other words, the MFJ standard deduction is not going to be twice the Single filing status.

So there will be another increase in all brackets.

[appelman]

Have a look at this worksheet.

http://www.mytaxburden.org/

This compares the various alternatives. Basically, the Republican proposal will return everything to 2009-ish, while the Democrat's proposal will do this for low- and middle-income taxpayers. Failure of our dysfunctional Congress to do ANYTHING will, as noted, raise taxes for everyone! No doubt that will help the budget.

Another time bomb -- this time for 2010: Congress has yet to adopt a patch for the AMT. Failure to do so is going to make a lot of middle-income taxpayers very unhappy. People say, "Of course, they'll fix it." But they also said, "Of course, they won't let the inheritance tax disappear in 2010 and come back full force in 2011." With this Congress, nothing can be taken for granted!

And all of this uncertainty does wonders for tax planning! Not to mention the extra cost for the IRS to get the system adjusted once a last-minute change is made. Our tax dollars at work.

[FEDUKE404]

Prediction

I feel that six months from now the withholding tables will be more or less where they are today, with slightly less withheld due to the higher 2011 personal exemptions.

Rough translation: I think the "Bush tax cuts" will be extended, likely (for now) to all taxpayers.

But things could get rough in the interim, and those January take home amounts may shock some people.

BTW: In the past I recall seeing very few folks that bothered with the advance EITC payments. (My current clients have no idea what EITC even is ) Has that option been stressed more in recent years?

FE

[erchess]

Feduke you have not listened to POTUS

But the POTUS has been telling us the evil "Bush tax cuts" only help those rich folks.

I'm confused!!

The folks in payroll/HR are certainly going to have a fun ride for the next six months or so......

FE

POTUS has said all along that he wants to keep the Bush Tax Cuts for all but the wealthiest two or three percent of Americans.

Personally I am opposed to that. I think the tax brackets should range from 35% low to 99% high. Be grateful POTUS is POTUS and I am not. People (and I don't necessarily include any particular board member here) who loathe POTUS should reflect on how moderate he is compared to say Howard Dean or Dennis Kuccinich.

[Bees Knees]

Personally I am opposed to that. I think the tax brackets should range from 35% low to 99% high.

We have an example of that already in Europe, where income taxes and the value added taxes (VAT) range from 70 to 80% on the top end.

They also have riots for proposing raising the retirement age from 60 to age 62, after running out of money trying to support everyone.

The price one pays for having government try to take care of everyone is everyone expects government to take care of them.

[taxxcpa]

No low bracket

Personally I am opposed to that. I think the tax brackets should range from 35% low to 99% high. .

I say split the difference and tax everyone at the same rate of 67%. I'm sure the other 33% would be enough to buy anything the government does not hand out to you.

[JohnH]

Plus it saves all that pesky business of having to make personal decisions. Life would be much easier if we just let the elites in Washington decide what we need & provide it for us rather than having to put up with all the inefficiencies & inequities of the free market.

[JCH]

We have an example of that already in Europe, where income taxes and the value added taxes (VAT) range from 70 to 80% on the top end.

They also have riots for proposing raising the retirement age from 60 to age 62, after running out of money trying to support everyone.

The price one pays for having government try to take care of everyone is everyone expects government to take care of them.

The quality of life is better in Europe, i.e., you get what you pay for. I'm not surprised they're rioting in France.

[DaveO]

I rarely ever saw advance EITC and glad of it. In a way I hope they don't fix the tax code and let the tax cuts expire. There would be a popular uprising of taxpayers that would make the Tea Party movement look like a Camp Fire Girls bake sale. Maybe then the newly elected congress would enact some long term tax policy along with spending reform. The USA is on an unsustainable course and the day of reckoning can't be delayed much longer.