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home : news : news   February 5, 2016

1/10/2013 1:28:00 PM
Pain in the pocketbook: You're feeling the tax pinch


Roger Vaccaro, comptroller for W.H. Maze Co., works on the Maze Nails payroll for this week at his office in Peru on Wednesday morning. Vaccaro is among the payroll managers bracing for calls from baffled workers wondering why net pay has fallen. The answer: Social Security contributions have risen by 2 percent. A FICA reduction passed two years ago expired when Congress passed legislation averting the so-called “fiscal cliff.”NewsTribune photo/Amanda Whitlock
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Roger Vaccaro, comptroller for W.H. Maze Co., works on the Maze Nails payroll for this week at his office in Peru on Wednesday morning. Vaccaro is among the payroll managers bracing for calls from baffled workers wondering why net pay has fallen. The answer: Social Security contributions have risen by 2 percent. A FICA reduction passed two years ago expired when Congress passed legislation averting the so-called “fiscal cliff.”

NewsTribune photo/Amanda Whitlock
Tom Collins
NewsTribune Senior Reporter



Roger Vaccaro is cutting 80 payroll checks this week and then is waiting for the phone to start ringing.
Vaccaro is comptroller of W.H. Maze Co. and preparing the first full payroll to reflect tax changes made when Washington averted the fiscal cliff. Maze employees will notice their after-tax pay has shrunk and then he fully expects they’ll want to know why.
“Yeah, I’m certain that we’ll get calls,” Vaccaro said. Maze also made changes to its 401(k) program so staff is braced for payroll change, he allowed, “but as this works itself through people will go, ‘Wait a minute, I’m losing on my FICA amount.’”
Workers throughout the Illinois Valley — indeed, throughout the United States — will notice the same thing. New paychecks will show net pay has declined by at least a few dollars. And for those households with earnings over $400,000, the hit was probably steeper.
So why did taxes go up? For the most part, they didn’t. The federal government did not raise income taxes, except on America’s wealthiest 1 percent.
What happened was Social Security contributions went up by 2 percent, from 4.2 percent to 6.2 percent. Washington didn’t raise the contribution, exactly. Instead, a 2-percent FICA reduction passed two years ago expired when Congress cut a last-minute deal to avert the fiscal cliff.
Maybe you didn’t notice when the feds rolled back the FICA contribution to 4.2 percent two years ago? That’s because Illinois raised its state income tax around the same time. Back then, the FICA relief and the state increase were a wash; now, people are feeling the pain.
A little pain, that is. A minimum wage laborer earning $330 a week will have seen his Social Security contribution increase by $6.60, about the price of a six-pack.
But at the other end of the earnings spectrum, the pinch is more significant. While the graduated federal income tax rates were unchanged for most Americans — 10 percent to 35 percent — the top rate would return to 39.6 percent for singles with incomes above $400,000 and married couples with incomes above $450,000.
U.S. Adam Kinzinger (R-Ill.) voted to avert the fiscal cliff but made it clear he wasn’t happy with the contents of the entire package.
“The House acted numerous times, well before the Jan. 1 deadline, to offer a balanced approach,” Kinzinger said. “I’m disappointed that the Senate and White House ignored these talks until the 11th hour.”
The Social Security rollback is by no means the only tax change taking effect in 2013. The feds also raised the maximum tax rate on long-term capital gains and dividends for people in the higher-income brackets from 15 percent to 20 percent and extended a slew of tax credits.
One tax preparer offered this advice: Don’t rush in with only half your paperwork — not this year.
“Wait until you get all the documents available,” advised Paul Danekas, a certified public accountant in La Salle. “People come in around the 15th and 16th and want to get the ball rolling — I see that all the time.
“The IRS won’t accept any filings until Jan. 30, anyway, so the best thing that people can do is wait for all their documents.”

Tom Collins can be reached at (815) 220-6930.












Reader Comments

Posted: Saturday, January 12, 2013
Article comment by: METALWORKER

Very astute of you. Yes, things I comment or about are subjects I have experienced or seen myself.
It cannot be any other way. I cannot write about how you may feel as I do not know how you feel, you haven't told me.
I can, however comment about the things you say. I can differ with your opinions as most, if not all opinions are open to debate.
Facts are not open to debate as facts are theories that have been proven.

Some things are I comment on are in the way of questions. They are a way of gathering opinions, studying those opinions and researching the validity of them thereby extracting factual material.
So, thank you for the feed back
METALWORKER


Posted: Friday, January 11, 2013
Article comment by: Anonymous46422

Metalworker: It's a pity that you don't think of anyone but yourself. You have a lot of ideas and energy, but it all evolves around you.

Posted: Thursday, January 10, 2013
Article comment by: METALWORKER

It is hard to believe that anyone is wondering why their pay check has shrunk by 2%.
Really, could it be that all repb. have been on a trip to some distant planet and just returned?
I say repb because they say that 47% of the nation is either on the dole or do notmake enough to pay any taxes.
As an independant I pay taxes and am not of the 42% who call themsefes repb. and so I scratch my head and I wonder where the members of the right wing media get their information.
As I rember the news from the last year that same segment of reporters that are now decrieng the end of a SS tax holiday are the same ones saying that folks like me who collect S.S. are the ones bankrupting the country and if only S.S. were ended or we would die or just stop spending the hard earned money of hard working empolies of the media why then they could buy that second Lexus or Caddie.
Sorry Collin, I ain't planning on going away anytime soon. I purly enjoy spending the mony of crybabiess. So thank you for your generous donations to me and mine.
I think that I will take a trip on that $3.00 cola increase I will be getting


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