ST. LOUIS (KMOV.com) – Many residents have their eyes fixed on the White House, waiting to see what will come out of the fiscal cliff talks.
The action, or lack thereof, of Congress holds a lot of implications, and many are waiting to see how much their taxes will go up.
News 4 spoke with a St. Louis Certified Public Accountant to determine how the looming ‘cliff’ could impact residents.
The first change is the reduced social security tax will be going back up for all residents, from 4.2 to 6.2 percent—even if an individual only makes $25,000 a year. That amountes to $10 per paycheck.
Additionally, there are multiple taxes and deductions that hang in the balance for middle income families that, if lost, would threaten to send taxes up thousands of dollars a year.
Local accountants have been busier this December than in any recent year. CPA David Smith. Said the biggest job he has faced is preparing his clients for the ‘what-ifs.’
“Really just helping our clients, plan for what’s going on and really just be aware of what the impact might be,” he said.
One of the tax credits hanging in the balance allows teachers to deduct up to $250 for any expenses they incur buying supplies for their classroom.
Also, tax credits that help families afford college costs for their children.
Many middle income families have been worried about a tax provision originally focused on the rich. The alternative minimum tax passed in the 1960s was focused on the wealthiest to make sure they didnt get out of paying taxes by using a lot of deductions and tax credits.
It hasnt been adjusted for inflation, so without any change by congress this year a lot of middle income families could see their taxes go up by $2,000-$3,000.
Smith says families most at risk are those with, “high levels of mortgage interest, families with a large number of kids or if you happen to have a significant state tax bill.”
Adoption tax credits are also at risk.
“I think the tax credits for adopting families are extremely important,” Smith said. “Often times that credit effectively pays for the bulk of the cost of the adoption.”