Has new tax rate in 2013 harmed you?

[LeavingOhio]

Don't want to get political, but I'm just curious if the new tax rates have done enough to make you change your spending.

I'm still working, so in my case, I'm losing about $120 a month or $1440 a year. I can deal with that, but for me that's not an insignificant change. I was considering upping my retirement giving, but I think I will hold off for now.

Taxes on dividends have gone up too right? So I'm assuming that will affect retired people at least to some degree.

 

[audreyh1]

Don't want to get political, but I'm just curious if the new tax rates have done enough to make you change your spending.

I'm still working, so in my case, I'm losing about $120 a month or $1440 a year. I can deal with that, but for me that's not an insignificant change. I was considering upping my retirement giving, but I think I will hold off for now.

Taxes on dividends have gone up too right? So I'm assuming that will affect retired people at least to some degree.

No, taxes on qualified dividends for most retirees will remain at 15%.

Do you consider the money withheld for your Social Security money you have truly "lost"?

Our taxes even went down for 2012 thanks to the AMT fix - saving us probably $8K in taxes! And I expect our taxes to be nice and low in 2013 since we are below the higher tax thresholds. I expected my taxes to go up quite a bit - especially the long-term cap gains and qualified dividends taxes, so I feel like my taxes went down!

 

[Andre1969]

The elimination of that payroll tax "holiday" going away has hurt me, to the tune of about $48 every two weeks. On top of that, my health insurance has gone up by about $33 every two weeks. But since health insurance reduces my taxable income, the real hurt there is probably about $22 per pay period.

Otherwise though, I don't make enough money to get into those higher tax brackets, where the real pain would probably start. And I think that's where dividends and capital gains get hammered, as well.

So, overall, I'm getting hit by roughly $35 per week ($70 per pay period, or $1820 per year).

Hasn't really hurt me. Yet.

 

[jon-nyc]

Not harmed, just cost money.

Not a great year for it to start, since it is my last working year (in top bracket) and I have inordinate capital gains this year (selling a home). So it'll cost me a tidy sum, into the 5 figures.

Next year I would see no real effect.

 

[RunningBum]

The dividend/LTCG tax rate only increases if your income is over 400K single/450K married, so doesn't affect too many of us.

I guess the $120/month tax increase you are seeing is the return of the social security tax back to 6.2%. Those deducting medical expenses will see some reduction in that deduction. Otherwise, don't the rest of the tax changes start kicking in around $250K?

 

[audreyh1]

The dividend/LTCG tax rate only increases if your income is over 400K single/450K married, so doesn't affect too many of us.

I guess the $120/month tax increase you are seeing is the return of the social security tax back to 6.2%. Those deducting medical expenses will see some reduction in that deduction. Otherwise, don't the rest of the tax changes start kicking in around $250K?

Yep - $250K for joint households. And not all income counts towards that $250K threshold either.

 

[RunningBum]

Also, it was pointed out to me in another thread (by audrey, I think), that some things like the 0% div and LTCG rate for those in the 15% bracket became permanent rather than expire, so the "new tax rates" have actually helped this retiree.

 

[timeasterday]

I'm getting about $140/month less take-home pay. Hasn't hurt yet - I adjusted our budget and I think we'll do fine. I get paid weekly and every check has been slightly different since 1/1. Usually they are exactly the same.

 

[NW-Bound]

Also, it was pointed out to me in another thread (by audrey, I think), that some things like the 0% div and LTCG rate for those in the 15% bracket became permanent rather than expire, so the "new tax rates" have actually helped this retiree.

In this land, is any tax law really permanent, or is it only permanent until Congress decides to change it in the future? Again, and again?

 

[audreyh1]

In this land, is any tax law really permanent, or is it only permanent until Congress decides to change it in the future? Again, and again?

That's what permanent means when it comes to laws - Congress can change it anytime as long as they get enough votes.

Temporary, on the other hand, means that a law was passed with a "sunset provision" - an expiry date when it reverts back to previous law. From 2003 until Jan 1 2013, much of our income tax law was temporary.

 

[travelover]

Michigan started taxing pensions again this year. That has hurt me and I've cut back spending, especially in the state.

 

[NW-Bound]

Yes, they removed the "sunset" provision, but I do not think it means much. In the near future, when they look at ways to raise revenue, they won't let retirees like me getting off so easily.

Not sayin' that I shouldn't be paying a bit more, when compared to workers like my children, of course.

 

[Lazarus]

Do you consider the money withheld for your Social Security money you have truly "lost"?

Yes, If I were still paying it. There is little improvement in SS for me if I worked from 55 to 62. So it would be money lost. Just a tax that I gain no benefit from.

Nice of them to reduce the rate for the last two years that I worked.

 

[Walt34]

Not significantly changing our spending here.

And I always thought the cut in SS taxes was, to put it mildly, unwise anyway.

 

[audreyh1]

Nice of them to reduce the rate for the last two years that I worked.

There ya go!

 

[FUEGO]

Harmed us? Ever so slightly. The 2% payroll tax increase vs 2012 will knock a couple hundred off our take home pay each month. I just saw that reflected in DW's first 2013 paycheck - it being $50 lower than last year.

The effect is simply that we'll be saving just a tiny bit less than last year. Really a rounding error for us in the grand scheme of life.

The "permanent" removal of the marriage penalty and keeping the high child tax credits benefited us immensely vs what would have happened had those two provisions expired. We will likely pay around zero federal income tax in spite of a six figure gross income.

 

[martyb]

The 2% payroll tax doesn't affect me personally. I am working but I don't pay into Social Security, so no change there. It does affect DW's pay some, but not sure about the amount. I'll edit my response when I look at her numbers.

 

[LeavingOhio]

The dividend/LTCG tax rate only increases if your income is over 400K single/450K married, so doesn't affect too many of us.

I guess the $120/month tax increase you are seeing is the return of the social security tax back to 6.2%. Those deducting medical expenses will see some reduction in that deduction. Otherwise, don't the rest of the tax changes start kicking in around $250K?

There is the 2% Tax Holiday that expired for everyone.

 

[LeavingOhio]

Well, good...glad to see no one feels too put out by it.

 

[audreyh1]

There is the 2% Tax Holiday that expired for everyone.

Uh, no, only for people working and paying into Social Security.

This does not affect retirees, and not everyone working pays into Social Security.

 

[FANOFJESUS]

Michigan started taxing pensions again this year. That has hurt me and I've cut back spending, especially in the state.

Several states are thinking about doing this since they are hurting.

 

[RunningBum]

There is the 2% Tax Holiday that expired for everyone.

That is the return of SS to 6.2% that I mentioned.

 

[GalaxyBoy]

I would think most of the members of this forum always recognized that the SS tax cut was always meant to be temporary and was set to expire at the end of last year (after being extended from the year before), and were prepared to handle its expiration. But all I hear at w*rk is how everybody's taxes went up and what a surprise it was and how it was all one party's fault, etc. etc. Or just as likely, "Tax holiday? What's that?" from college-educated professionals.

But I'll pile on to the opinions above. I can't help but be pleased about the 0% LTCG rate being made permanent (yes, I know) and how otherwise things really didn't change much for my tax bracket. I gross 6 figures, but by withholding the max amount in 401k, contributing to IRA, etc. it gets my taxable income down to where I can take advantage of at least a few thousand $ worth of "free" LTCG.

 

[Mulligan]

I would think most of the members of this forum always recognized that the SS tax cut was always meant to be temporary and was set to expire at the end of last year (after being extended from the year before), and were prepared to handle its expiration. But all I hear at w*rk is how everybody's taxes went up and what a surprise it was and how it was all one party's fault, etc. etc. Or just as likely, "Tax holiday? What's that?" from college-educated professionals.

But I'll pile on to the opinions above. I can't help but be pleased about the 0% LTCG rate being made permanent (yes, I know) and how otherwise things really didn't change much for my tax bracket. I gross 6 figures, but by withholding the max amount in 401k, contributing to IRA, etc. it gets my taxable income down to where I can take advantage of at least a few thousand $ worth of "free" LTCG.

Doesn't this just reinforce the fact of how clueless the average citizen is concerning these matters. But they probably know what Snooki is up to today, however. Where I work pt, the boss had to send out a memo to explain it as no one knew why or for what reason their taxes just went up. I would bet most didn't even know that they went down 2 years ago, or for what reason if they did notice.

 

[HFWR]

And I always thought the cut in SS taxes was, to put it mildly, unwise anyway.

It was the only way to cut taxes on lower income workers.