Well, in the new job's email newsletter, they put a little blurb together: (I've redacted my employer from the text, I know it's easy enough to find out where I work, but I am trying to honor their privacy and hope you do the same)
How Will the Fiscal Tax Cliff Impact Me?
A number of tax laws are set to expire on Dec. 31, and if the President and Congress don't reach an agreement before then, the result will be tax increases to all of us. The following is a breakdown of the items that could likely have the most impact:
There are two parts to FICA taxes: Social Security and Medicare. With both Social Security and Medicare, employees pay taxes and redacted, your employer, pays a matching contribution tax. In December 2010, the Tax Relief Act was passed which temporarily reduced the employee Social Security tax from 6.2 percent to 4.2 percent of earnings; however the employer contribution of 6.2 percent did not change. The Tax Relief Act was extended twice and is now set to expire on Dec.31, after which the employee Social Security contribution will return to 6.2 percent. Both employee and employer are scheduled to pay 6.2 percent in tax on earnings up to $113,700 in 2013.
The second part of FICA is the Medicare tax. Both employee and employer contribute 1.45 percent of earnings (on all wages with no limits). At the same time that the temporary 2 percent decrease in employee Social Security payroll taxes expires, a new 0.9 percent Medicare payroll tax increase will go into effect on Jan. 1, 2013 as part of the Patient Protection and Affordable Care Act. The increase will apply to employees only and will increase the employee Medicare tax from 1.45 percent to 2.35 percent on wages over $250,000 for married taxpayers filing jointly and $200,000 for single taxpayers.
Individual income tax
Individual tax rates are scheduled to increase and the existing 10 percent tax bracket would be eliminated (taxed at 10 percent of the first $8,700 in earnings). Under the new schedule, the 15 percent tax bracket would become the lowest tax rate (earnings from $0 - $36,250). The other tax brackets will change as follows: 25 percent bracket increases to 28 percent (earnings from $36,250 - $87,850); 28 percent bracket increases to 31 percent (earnings from $87,850 - $183,250); 33 percent bracket increases to 36 percent (earnings from $183,250 - $398,350), and 35 percent bracket increases to 39.6 percent in 2013 unless the government decides to extend the existing lower rates.
In addition the supplemental tax rate will revert back to 28 percent from 25 percent. This affects PTO cash-in payments and bonus payments.
Dividends would be taxed as ordinary income rather than at the same rate as capital gains.
A proposed 3.8 percent tax on “net investment income” for taxpayers with income exceeding certain thresholds - $200,000 for unmarried individuals, $250,000 for married couples, $125,000 if married filing separately – who receive interest, dividends, capital gains or other investment income.
The per-child tax credit would revert to $500 from its current level of $1,000 and would cease to be refundable.
Section 127 of the Internal Revenue Code allows an employer to reimburse an employee on a tax-free basis up to $5,250 each year for certain educational expenses provided through an educational assistance program (such as the redacted Tuition Reimbursement program). Effective Jan. 1, 2013, all redacted tuition reimbursement benefits could become taxable income to associates.
The income tax exclusion for amounts paid by an employer under a qualified adoption assistance program is also set to expire on Dec. 31. A qualified adoption assistance program (such as redacted’s Adoption Assistance program) allows an employer to reimburse an employee on a tax-free basis for expenses related to the adoption or attempted adoption of a child. Qualified expenses include reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses and other direct adoption-related expenses. Effective Jan. 1, 2013, redacted adoption reimbursement benefits could become taxable income to associates.
So, how's that sound, folks? Glad you elected the folks you elected? They made these policies and designed them to expire now so they could save political face, or as many have called it "kicked the can down the road." We have finally caught up to the can.