Higher payroll tax for 2013

Even though Congress had a last minute vote in favor of "avoiding" the fiscal cliff, everyone who is employed in the United States will see smaller paychecks going forward. The payroll tax had been temporarily reduced to 4.2% in order to give Americans extra spending money.

The thinking was that the extra money would be spent and it would help stimulate the economy. As of Jan. 1, 2013, it will return to 6.2%, on the first $113,700 in wages.

Payroll taxes are crucial for funding Social Security, and the break of the past two years has forced the government to replenish the funds with borrowed money adding to the national debt. The tax break was meant to be temporary when it was established.

According to CNNMoney.com, in their article titled, Smaller paychecks coming - bosses say, don't blame us, the average salary in the U.S. is $41,000 and people who earn that much each year before taxes will see $32 less in each biweekly check.

For information on just how much the payroll tax increase will affect all paycheck amounts, check out this chart found at: http://philadelphia.cbslocal.com/2013/01/02/payroll-tax-holiday-expires-see-how-much-youll-pay-now/.

As of 1/2/2013, the statement found on the Internal Revenue Service website on the new tax legislation is as follows:

"The IRS is currently reviewing the details of this week's tax legislation and assessing what impact it will have on this year's filing season. The IRS will soon make available additional information on when taxpayers can start filing 2012 tax returns."

For more details on the payroll tax, MSNMoney.com posted an article titled, Why your next paycheck will be smaller, and can be found at: http://money.msn.com/how-to-budget/article.aspx?post=a7019151-a263-4343-8914-a35d6b35d3a5.