How the Tax Cut Package Will Affect You in 2011
Perchance you’ve heard about the $858 billion U.S. tax cut deal signed into law? Sure you have – we’ve been blogging about it here. But how does it actually impact what you’ll pay out in taxes in 2011? Here are some tips on what to expect.
Personal finance blog Wise Bread cuts through the news tidbits and pulls out some matters relevant to your paycheck and savings plans for the coming year. Among them is a great idea to pretend the Social Security tax cut never happened—by putting the difference in your own retirement account:
The Social Security taxes paid on wages will be reduced 2% for 2011 only. Basically, workers will pay 4.2% of their wages instead of 6.2% in 2011. The wage ceiling for Social Security taxes is $106,800, so this means that the maximum amount a person could save is $2,136. This is a good opportunity for everyone to contribute the 2% savings to a retirement account since you are given a reprieve from funding someone else’s retirement.
Read the link for more tips on where the tax cuts leave you.