WEAU | Eau Claire, Wisconsin | News, Weather, & Sports

Have a job? Expect to pay a lot more in taxes this year

EAU CLAIRE, Wis. (WEAU) -- A $20 bill can go a long way, even buy you a generous bag of groceries.

But this year with the payroll tax going up, families making between $50,000-$75,000 yearly will end up paying a little more than $800 in payroll taxes. Put another way, that adds up to about 40 bags of groceries.

Linda Xiong is not paying anything to let her daughter, Charity, spend an evening playing at the library.

It is much needed free fun, and even more so this year. With payroll taxes going up, her family will have less money to spend on the necessities.

"Diapers, clothing, especially this past holiday we were Christmas shopping a bit," Xiong said.

Her husband is going to school and is in the military. Linda is a recent grad working full-time.

"We're kind of juggling everything together," she said.

On top of that, they are expecting another baby.

"It's kind of looking around and seeing where we can budget our expenses," she said.

She says they are thinking about traveling less this year. And that is what Brittany LeBarron has in mind as well.

"Definitely on trips, my family is big on trips," LeBarron said.

She says her family will stick to other strategies this year too, like thinking twice before picking something up off the shelf and putting it in the cart.

"We'll kind of stick to the list rather than it would be fun to just grab a new movie or something like that," LeBarron said.

She says daycare for Ryan is their biggest expense. Both her and her husband work, so trying to figure out how to cut expenses is key. She says they are at the library at least once a week.

"And now we usually just come here especially for the kids movies," she said.

A simple strategy, doing more with less.

--------------------------------------------------------------

WASHINGTON (AP) -- While the tax package that Congress passed New Year's Day will protect 99 percent of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013.

That's because the legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year.

The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent of American households will face higher federal taxes in 2013 under the agreement negotiated between President Barack Obama and Senate Republicans. High-income families will feel the biggest tax increases, but many middle- and low-income families will pay higher taxes too.

Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center's analysis. Households making between $50,000 and $75,000 will face an average tax increase of $822.

"For most people, it's just the payroll tax," said Roberton Williams, a senior fellow at the Tax Policy Center.

The tax increases could be a lot higher. A huge package of tax cuts first enacted under President George W. Bush was scheduled to expire Tuesday as part of the "fiscal cliff." The Bush-era tax cuts lowered taxes for families at every income level, reduced investment taxes and the estate tax, and enhanced a number of tax credits, including a $1,000-per-child credit.

The package passed Tuesday by the Senate and House extends most the Bush-era tax cuts for individuals making less than $400,000 and married couples making less than $450,000.

Obama said the deal "protects 98 percent of Americans and 97 percent of small business owners from a middle-class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country."

The income threshold covers more than 99 percent of all households, exceeding Obama's claim, according to the Tax Policy Center. However, the increase in payroll taxes will hit nearly every wage earner.

Social Security is financed by a 12.4 percent tax on wages up to $113,700, with employers paying half and workers paying the other half. Obama and Congress reduced the share paid by workers from 6.2 percent to 4.2 percent for 2011 and 2012, saving a typical family about $1,000 a year.

Obama pushed hard to enact the payroll tax cut for 2011 and to extend it through 2012. But it was never fully embraced by either party, and this time around, there was general agreement to let it expire.

The new tax package would increase the income tax rate from 35 percent to 39.6 percent on income above $400,000 for individuals and $450,000 for married couples. Investment taxes would increase for people who fall in the new top tax bracket.

High-income families will also pay higher taxes this year as part of Obama's 2010 health care law. As part of that law, a new 3.8 percent tax is being imposed on investment income for individuals making more than $200,000 a year and couples making more than $250,000.

Together, the new tax package and Obama's health care law will produce significant tax increases for many high-income families.

For 2013, households making between $500,000 and $1 million would get an average tax increase of $14,812, according to the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341.

"If you're rich, you're almost certain to get a big tax increase," Williams said.


Comments are posted from viewers like you and do not always reflect the views of this station.
powered by Disqus
WEAU 13 NEWS 1907 S. Hastings Way Eau Claire, WI 54701 By Phone: Main Number (715) 835-1313 and (715) 832-3474. Tip Line (715) 839-WEAU - (715) 839-9328 Sports Line (715) 852-1537
Gray Television, Inc. - Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 186115271 - weau.com/a?a=186115271