Posted: Dec 28, 2012 9:32 PM by Allie Hinds
Updated: Dec 28, 2012 10:52 PM
COLUMBIA - As the end of the year draws closer so does the "fiscal cliff," the tax hikes and spending cuts that will automatically kick in if Democrats and Republicans can't come to an agreement before January 1st.
The biggest hurdle the two parties are trying to get over is tax hikes for those with incomes greater than $250,000.
The median household income in Columbia from 2007-2011 was $43,102, according to the United States Census Bureau.
But it's not just those making six figures who will be affected.
"It's going to affect everybody because the things that are in the Bush tax-cuts are going to expire. It'll affect probably 90 percent of the American households. The 10 percent tax bracket is probably going to disappear. So people will be taxed at 15 percent instead of ten," president of Krieger & Krieger Accountants &Tax Consultants Inc., Jeff Krieger, said.
One of those Bush tax cuts set to expire is the child tax credit.
"You take away a child tax credit for a single mom with three kids. Right now she gets a credit for those kids who are under age 17. That is a proposed change they want to take away so she just lost $3,000 of her refund," Krieger said.
Krieger said it's families and small businesses who will be hit the hardest.
Last year the government provided over $91 million to small businesses, but that will likely go down significantly next year.
Krieger said he recently talked to a man buying a $100,000 piece of equipment for his business. Currently he can write off that purchase completely. But if no agreement is reached by January 1st that write off will be down to $25,000.
Krieger said his office has been busy with calls from people asking what they need to do if we do "go off" the cliff.
"At this point we're telling them to accelerate their income in to 2012, because we think the rates are going to be cheaper now than they will be next year," Krieger said. "Take advantage of the deductions we currently have."