In January 2013 people opening their first paycheck of the year may be in for a surprise. Their paycheck will be less money than usual. This is due to a bill that congress let expire during the fiscal cliff fallout. Two years ago a temporary cut in Social Security withholdings gave American workers hundreds of additional dollars to spend. However, now taxes have gone back to 6.2% of the salary as compared to the temporary cut of 4.2%.
Many are wondering if this pay cut could prevent economic growth or is it just a temporary setback? Companies may notice that consumers have a bit more cautious attitude when it comes to spending. It has been predicted that people may not go out to eat as much and/or may purchase the less expensive brand versus the name brand.
When an accountant recently opened her first 2013 paycheck she realized that she and her husband will take home $250 less each month. This pay cut is causing her husband to work a second job. This particular accountant also recently had her second child. In the past she had purchased name brand baby product items, now she says that she always buys the retailers brand because it is a much lower cost.
Tax economist expert Roberton William said this particular tax cut will give the normal everyday household about $20 less to spend per week which is about $1,000 a year. The country’s consumers as a whole will have a decline of $120 billion from last year.
Many are concerned that the payroll tax cut could alter various companies such as food producers, clothing retailers, restaurants, grocery stores and consumer-goods makers. Many companies have stated that it is simply too soon to know the impact of the tax cut.
In the next month we will give you helpful tips to help you prepare for the upcoming tax season. If you have tax questions or needs our tax preparation professionals are happy to discuss your tax questions free of charge. For more information about our services, visit us today at www.businesstaxpreparation.com. With over 16 years of tax preparation experience we look forward to the 2013 tax season.
For more information about our tax services visit us at www.businesstaxpreparation.com. Contact us by phone at 866.676.9417 to receive a free, no obligation consultation.