How Atlanta Taxpayers Could Be Affected By Higher Income Taxes
Ah, the Bush tax cuts - can't live with them, can't live without them.
On the one hand, Uncle Sam needs money from somewhere - and allowing the tax cuts to expire next year is one way to ease debt (some of which was arguably caused by the Bush tax cuts). On the other hand, if Democrats and Republicans can't decide on how to handle the expiring taxes, we'll be paying more - wealthy or not - say Atlanta bankruptcy attorneys. And paying a higher tax bill won't exactly be a piece of cake for the many Americans struggling to make ends meet and pay off debt.
For the record, President Obama wants to let the cuts expire for the wealthy and preserve them for everyone else. Republican leaders, however, stubbornly oppose allowing them to expire at all. Without intervention, tax rates will bounce back to pre-Bush brackets - instead of 10%, 15%, 28%, 33% and 35%, we'll be paying 15%, 28%, 31%, 36% and 39.6%. In other words, even those of us with the lowest taxable incomes will face a 5 percent increase in our tax bill next year.
We can't control the government's decision, but we can make a possible tax hike easier on ourselves by being prepared. If a higher tax bill would be a huge headache for you, maybe it's best to start saving gradually now. By setting aside just $50 a month, you could have hundreds saved up by next year - maybe enough to cover your taxes and more. Even if you don't end up needing the money, you can consider it part of your emergency savings fund - built-in protection against any other unpleasant financial surprises.
When it comes to investing, you can still save some of your money at today's tax rates. For instance, consider switching your retirement money from a traditional IRA to a Roth IRA. With the Roth, you pay taxes when you put money in - at today's rates -- rather than when you withdraw, when tax rates will likely be much higher.
Then there's a way to help pay your taxes next year and the year after that and the year after that - bankruptcy. It might sound unrelated, but by lowering your debt burden you can free up money to cover other expenses, whether that means taxes, groceries or simply the cable. If debt is keeping you from achieving your financial goals, an Atlanta bankruptcy attorney can help. Find out for free if there's a bankruptcy plan right for you with our complimentary one-on-one debt analysis.