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Fiscal Cliff: What It Means For Your 2013 Paycheck

The financial deadline looms in Washington, with no deal yet made. Check this primer, and share your questions and thoughts.

With Christmas 2012 over, one reality check is that the looming "fiscal cliff" deadline is just a few days away.

On Dec. 31, tax cuts dating to the George W. Bush presidential term are scheduled to expire, and President Obama and congressional leaders have not reached a compromise.

There is panic in Washington as threats of another recession and a jump in unemployment looms.

Of course, that means tax bills would increase for many middle- and upper-class taxpayers. And that means paycheck withholding for many workers would change, leaving them with less take-home pay in the new year.

Apparently, though, there will be no immediate change in withholding tables, while the situation is unresolved.

According to John Tuzynski, the IRS’ chief of employment tax policy, employers should continue to use 2012 withholding tables and personal exemption amounts until further notice.

And cnbc.com reported that employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year, said Michael O'Toole of the American Payroll Association.

However, a caveat: If employers don't withhold enough taxes in January, they will have to withhold more later in the year to make up the difference. Otherwise, taxpayers could get hit with big tax bills, and possibly penalties, when they file their 2013 returns.

If no compromise is reached by the president and Congress, the hit will be noticeable in many workers' paychecks.

A taxpayer making between $50,000 and $75,000 would get an average tax increase of $2,400, according to the Tax Policy Center, a Washington research group. If the worker is paid biweekly, that's about $92 a paycheck.

About 75 percent of taxpayers got tax refunds in 2012, averaging $2,707, according to the IRS. And many people rely on tax refunds to pay bills or make major purchases.

Dan Avery December 31, 2012 at 10:37 PM
I quit reading this thread at "the Democrats are communists." That sort of ignorance is stunning. Clearly the person who wrote that has never read Marx, and has a substandard education. It's simply impossible to have an intelligent conversation with people like that.
Shripathi Kamath December 31, 2012 at 11:06 PM
But then, all one has to do is scream "Democrats are communists" on anything and it'll get you to quit. Seems like an intelligent way for someone to stop you from communicating. Taking the high road is usually productive, but not always. Sometimes it helps to expose the troll as the three dollar bill he yearns to be. The last one who identified 80 (only?) communists in the Democratic party (http://politi.co/UgTQYU) got his marching papers on 11-6. So do we consider him a victim of the communists or a prophet of the wingnuts? Would it matter in the long run? But imagine the wholesome fun you can have entertaining the notion that it is the former. (Also fun: when the communist Democrats morph into fascists)
Yeparoo December 31, 2012 at 11:28 PM
"Fiscal Cliff" is a false narrative just like "11-6'r." Just people trying to sell T Shirts. Pushing all the decisions until after the election was brilliant politics. Kudos to Pres Obama and his team for schooling the Republicans.
Lawrene Bottorf December 31, 2012 at 11:36 PM
Education is different things to different people. In this country, sadly, substandard and education are synonymous when it comes to common sense, truth, and respect. When we hit the bottom, morally and fiscally, my prayer is that truth will prevail, and cause us to rise above the mess, and become great again.
JustUs January 01, 2013 at 12:24 AM
Well, looks like we're all going over the FISCAL CLIFF!!! GERONIMO!!! Last one over is a rotten egg!!! HAH!!! HAPPY NEW YEAR!!! WE ARE BEING RULED BY 535 COMPLETE IDIOTS AND A COMMANDER IN CHIEF WHO COULDN'T FIND HIS BEHIND WITH BOTH HANDS AND A SPOTLIGHT!!! HAH!!!
Shripathi Kamath January 01, 2013 at 12:36 AM
Actually, Boehner did have a great opportunity last week, which was scuttled by his House. In their zeal to deny the black man any semblance of a victory, a bunch of them refused to allow a vote on the marginal rates. It was the most leverage he could have conjured up from a pretty hopeless situation politically, because once you say you are saving all those making less than a million (including the "middle class") from a tax hike, you put the pressure back on Obama. And he would have caved, as he has incrementally throughout this, and before. That was the House's Christmas gift. The fiscal cliff is not a false narrative, it is real, as is the 11-6 wound for some. Only, it does not hurt as much as soon. In three months it'd have, but looks like they'll resolve it by then, if not within a few days. The only difference now is that a more Democratic Congress will be voting to cut the rates for all than raise them for a few.
Shripathi Kamath January 01, 2013 at 12:43 AM
"Education is different things to different people." "In this country, sadly, substandard and education are synonymous when it comes to common sense, truth, and respect." So that's what education means to you, or what you think it necessarily means to unnamed people you are broad-brushing there? "When we hit the bottom, morally and fiscally, my prayer is that truth will prevail, and cause us to rise above the mess, and become great again." In your opinion, are there any great nations today? Is there, today, a greater nation than the US, and if so, which one? Besides what sort of common sense is it to believe that to rise from setbacks one has to hit rock bottom? Did we have to have the Civil War to regain greatness? Did we have to go through a Great Depression and two World Wars to regain greatness?
JustUs January 01, 2013 at 02:17 AM
Obama was so concerned with the nation going over the fiscal cliff and millions being harmed by his INACTION and he jumped aboard Air Force One and went to catch a wave in Hawaii over Christmas!!! HAH! Talk about DERILECTION OF DUTY!!!! That should be an impeachable offense. What a scofflaw he is! His Christmas Hawaiian vacation was more important than the fiscal health of our nation!! Some POTUS, huh??? IMPEACH HIM!!!
Dan Avery January 01, 2013 at 03:51 AM
The only thing going over the fiscal cliff means is that the Bush tax cuts expire. That is light years away from a high crime or a misdeanor. We couldn't afford those tax cuts where "The Son of the Snake" enacted them. Only the truly stupid and the doomed believe you can keep cutting taxes for 30 plus years.
Dan Avery January 01, 2013 at 04:06 AM
Lawrene, "Education is different things to different people." That is spoken like someone who pimps college loans. And it's bull. Education is education and we know exactly how to improve it or make it worse. The top 1%'s kids get a great education in this country. The rest of us, unless we're lucky or extremely bight and get noticed, get a substandard education. Education is not different things to different people. Your average American believe that it will get them a "better job." That's a bunch of crap and is not the role of education at all. And your average American pays way too much for the education their kid gets at a UC school, or the University of Michigan, or the University of Nebraska, or the University of "Put your favorite state's name here". If your kid isn't at an ivy league school or a small liberal arts college somewhere like the midwest or Pomona, then your child isn't getting a quality education.
met00 January 01, 2013 at 10:20 AM
"Education is education and we know exactly how to improve it or make it worse." Dan, we are going to have to disagree here. Most people in positions of power in Education have no idea how to improve it. Which might explain why it's crap. You have the Michelle Rhee's who are out pimping that the tax dollars should be given to private enterprise to educate the masses. Wrong! Then you have the private schools that say they have the answer (they don't). Education started like manufacturing did. It was a craft, and craftsmen (mostly women) performed the craft. With the advent of the assembly line some government bureaucrat decided that it would work in education. So they threw the baby out with the bathwater and created an education system that gives everyone a McDonalds hamburger, ignoring the fact that some people can eat steak and some must eat soft foods. There are ways to fix what has been broken (heck I co-authored a patent on one way to do it), and to do so without costing a fortune. But it requires an embrace of something other than the current assembly line model for the delivery of education, and the nimrods running the show are too comfortable in their 40 degree room to understand that a 78 degree room is actually better. There are two things that motivate people. Pleasure and pain. And the greater is pain (or fear of pain - which is why they don't change). Until someone successfully proves the "new" system, nothing will change.
met00 January 01, 2013 at 10:26 AM
"Obama was so concerned with the nation going over the fiscal cliff and millions being harmed by his INACTION and he jumped aboard Air Force One and went to catch a wave in Hawaii over Christmas!!! HAH! Talk about DERILECTION OF DUTY!!!! " Where were you when Bush had Condie read him a PDB about bin Laden using commercial aircraft as weapons of mass destruction? Of when Bush ran away after the towers came down (his route from FL to DC was via Omaha I believe)/ Or maybe when Bush stayed on vacation and then went to wish McCain a happy birthday rather than deal with Katrina. Or when Bush bailed out the banks, but never prosecuted them in any way shape or form? Or when Cheney outed a CIA agent and her cover? Yeah, I know. Obama bad. Get over it.
met00 January 01, 2013 at 10:38 AM
Dan, here is the current basic rule. 1) Implement the Chicago School of Economics and Milton Friedman's polices. 2) They fail and only transfer wealth to the top 10% The economy starts to collapse under the weight of the failed polices. 3) Relax the policies and reverse some of them 4) The economy starts to recover 5) Elect another nimrod who doubles down on the failed polices 6) transfer more wealth to the top. 7) have an economic crash 8) Blame the Democrat and state the only way to fix it is to... 9) Double down on the failed economic policies of the Chicago School and Milton Friedman. [wash, rinse, repeat] The answer is go back to the last period of working class growth and see what policies created it, then implement those policies. What policies would that be? The 1958 tax code with all financial numbers adjusted for inflation. Breaking up "to big to fail" banks. Reinstating Glass-Stengel. Putting bankers and Wall Street ripoff artists in jail (I believe Iceland just did that). Investing in technology (build a colony for 10,000 under the sea, it;s the exact same technology issues as building one on the moon, just less travel). Create public alternatives to private business that has become monopolized (why do countries in the EU have better, faster and cheaper internet access than the US?). That's a start.
Frieda Wales January 01, 2013 at 04:23 PM
Ooops, it's in the hands of the House of Representatives now. Seriously, some people here have brought up a good point. Those that decry the large debt should be in favor of the tax cuts expiring. Why the disconnect there? I don't get it.
JustUs January 01, 2013 at 06:28 PM
So as I expected, did you see that they increased the taxes but kicked the spending bucket down the road for 'future review'? heh. You see, they can't cut the leeches off. They know if they do that there will probably be uprisings all over the nation. The rule is once you start feeding the bears you can't stop. Once they forget how to feed themselves and become dependent upon YOUR handouts - they own you. Why? Because once you stop feeding them they attack. Humans aren't much different from bears. The DNA that separates us is only different by about a 2% margin. I hope you learn something from me. :)
Dan Avery January 01, 2013 at 07:25 PM
met00, I don't disagree with anything you've said, but what you said doesn't prove that those folks didn't know exactly how to improve education. Take the example of the assembly line. I think the guy who decided to apply it to education knew exactly what he was doing. How well educated does one have to be to work on an assembly line? In other words, aren't assembly line workers better workers if they are ill-educated and don't have a thought in their heads? Would someone who actually likes to think be happy working on an assembly line for their entire life? Do you really think these people who pitch school vouchers think that will improve anything? I think they understand that it's just another form of white flight and that is precisely why they float that idea. The existence of the eastern prep schools and colleges like Yale, Harvard, Dartmouth, et. al., prove that we know how to make education work extremely well. They also prove that we don't want everyone that educated. Hence the state University system.
Dan Avery January 01, 2013 at 07:35 PM
met00, Finland made a broadband internet connection a right. 25% of Finland is above the Arctic Circle. Can you imagine the uproar in this country by the right-wing doomed if we even thought about that? So we fall further and further behind because we listen to the stupid. The other thing the EU has that is better than what we have is their educational system. Taxi drivers in Scotland are more articulate than your average U.S. citizen. I seriously pity the ten-year-olds in this country. They are completely and utterly screwed.
Dan Avery January 01, 2013 at 07:36 PM
Pacific Coast Mama, People are greedy and mean. Just a guess, but read through the chat again. Makes sense doesn't it?
met00 January 01, 2013 at 10:07 PM
Actually, as of right now the Bush Tax Cuts are 100% historical. So, any tax cuts done from this point forward are the Obama Tax Cuts. Personally, I think he should just keep the Clinton Tax Rates (which is where they are right now).
JustUs January 01, 2013 at 10:17 PM
Obama owns the tax cuts for the ultra rich. He signed the law that extended those 2 years ago. Remember? So you can't blame those tax cuts on Bush for the last 2 years. Those were Obama tax cuts. Obama is a big liar. You can't trust anything he says.
Lawrene Bottorf January 01, 2013 at 10:26 PM
I read a book called "Something for Nothing" and statistically, people will fight 2.5 times harder to keep 1 dollar than they will to go out and earn 1 dollar. I am so saddened when I speak to the uninformed masses, who have no idea they voted such a huge debt burden on their future...and SHAME on our selfish generation, for forcing our kids to pay for our entitlements!
JustUs January 01, 2013 at 10:35 PM
Lawrene, All baby boomers should be totally ashamed of our generation. We are the selfish ones who have destroyed the future of the younger generations. I don't know what's wrong with the young people? Are they anestitized or drugged up and numbed? Don't they understand that they are being turned into debt slaves to fund our retirements? Why aren't they protesting? They have to take out $70,000 loans to get an undergraduate degree and can't even find a $12/hr job. hah! What is wrong with them? Aren't they smart enough to figure it out?
Lawrene Bottorf January 01, 2013 at 11:45 PM
JustUs---in a word...INDOCTRINATION. Are they smart enough??? I think so, but have never sacrificed. in 10700 hours of k-13, not ONE hour is spent on financial literacy. We do Dave Ramsey classes here at our office, and surprisingly, very few parents attend. The allow their 17 year old to make HUGE financial decisions that will further bury them in debt. Very sad.
JustUs January 02, 2013 at 03:26 AM
"I think so, but have never sacrificed. in 10700 hours of k-13, not ONE hour is spent on financial literacy." Lawrene, that is an INTENTIONAL omission, btw. They don't want people to be financially literate and understand how they are being robbed and mugged by a corrupted government. They are INTENTIONALLY dumbing down the population so they can take full advantage of them. Otherwise, there WOULD be time spent on financial literacy. It's not that hard to figure out.
JustUs January 02, 2013 at 03:28 AM
Obama has been in charge for 4 LONG years now. You can't blame BUSH anymore! HAH! So don't even go there. The Commander in Thief now has the initials B.H.O.!!!! HAH! :)
Lawrene Bottorf January 02, 2013 at 04:04 AM
I am thoroughly disgusted with our congress...a 17% approval rating...yet the ignorant masses keep voting these thieves in. Well America...when the pain gets bad enough, you can look in the mirror at the problem...and tip your hat...if you still have one.
Shripathi Kamath January 02, 2013 at 05:31 AM
Ah, blaming the ignorant masses which is the moral thing to do since you belong to a different group -- one with common sense that emphasizes personal responsibility by blaming ignorant masses. I hope you let your Congressman (John Campbell, is it?) that he is a thief.
fact checker January 02, 2013 at 05:46 AM
They????
met00 January 02, 2013 at 05:53 AM
Dan, education IS my business. Heck, I have an awarded patent on Computer Adaptive Diagnostics for Education that I co-authored. When it comes to what do we need to do to fix education, it's not just my passion, I AM actually one of the experts in the field. :-) The current method of education says; if you are 7 years + 0 days to 7 years +364 days old you can be put in a class with other students in that groups and all of you can be taught the exact same information by the exact same method and learn at the exact same rates. Now there are so many different holes in that methodology that ensure that it fails, but it does provide an easy way for a system to provide a minimal education to a specific group of students. The premise is that under this system they teach to the 7yr+180day level and those above that level will get it and be bored and those at that level will get it and those under that level will get it somewhat. The problem is that education is generally a building block process in what you learn next is based on what you already know, and if there are holes that are not closed, you can't build on that base. The solution is JIT (Just In Time) education where the student undergoes diagnostics that quickly define where the "holes" are so they can be closed and the student will have the proper foundation for the next educational step. Not vouchers or charter schools, but individualized instruction teaching what needs to be taught when the students ready.
JustUs January 02, 2013 at 07:07 AM
The ones who design the educational curriculum and their bosses. Why wouldn't they teach financial literacy in a society that is predicated upon financial literacy. Connect the dots. It makes no sense. If it makes no sense and doesn't pass the stink test - it's an intentionally broken system.

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