Monday, December 3, 2012
DAMNED IF THEY DO AND DAMNED IF THEY DON'T
It is December already and there is no progress in Washington on “taxmegeddon”.
If (or more likely when) BO and the idiots in Congress fail to act on the “fiscal cliff” issues before the end of 2012, what is the IRS going to do regarding withholding tables for 2013?
If the Service follows “current” law, federal income tax withholding will substantially increase for many, if not most, employees, as the so-called “Bush tax cuts” will have expired on December 31, 2012, and everything will go back to pre-Bush rules. If the idiots in Washington eventually pass retroactive extensions of the expiring breaks, the IRS will need to revise the withholding tables, as will software companies, and withholding will be totally FU-ed for an extended period of time, resulting in lower pay checks for almost all employees for a couple of months.
If the Service assumes the idiots in Washington will eventually pass retroactive extensions and does not change the federal withholding tables, keeping everything the same as 2012 or with some inflation adjustments, and the idiots in Washington do nothing, the IRS will need to revise the withholding tables, as will software companies, and withholding will be totally FU-ed for an extended period of time, resulting in many employees being under-withheld for the year and owing tax when filing their 2013 returns.
Unfortunately it is we taxpayers, not the IRS or the idiots in Washington, who may be damned if they do and damned if they don’t.
We must hope that whatever assumption the IRS uses to determine federal income tax withholding effective January 1, 2013 turns out to be correct.