A panel of local accounting specialists discussed the changes to taxes brought on by the fiscal cliff bill.
The bill, signed into effect Jan. 1, made a number of changes to tax credits, especially to individuals making more than $400,000 a year or $450,000 a year if married.
Juli Wondra, certified public accountant with Adams Brown Beran & Ball, Glen Snell, financial adviser and CPA with Ameriprise Financial Service (Holman, Snell & O’Connor-Munsey), and Randee Koger, attorney with Wise & Reber, L.C., were a part of a financial reform panel Friday at The Cedars. Each panelist brought his or her own expert analysis on the fiscal cliff bill and answered questions from the audience.
Wandra opened the panel with potential outcomes for Americans if the bill had not passed.
“Had the bill not been passed, everyone in this room would likely have seen large tax increases across the board,” Wandra said.
She said the bill made permanent the Bush-era income tax rates with the exception of taxpayers making more than $400,000 a year ($450,000 for married taxpayers, $425,000 for heads of households.) Income above those levels will be taxed at 39.6 percent.
Wandra also explained a change in Medicare tax rates brought on by the Affordable Care Act. The Medicare tax rate in 2013 is 1.45 percent for both employer and employee. For those making more than $200,000 a year ($250,000 for married taxpayers), however, employers must withhold an additional 0.9 percent additional tax for Medicare, totaling a 2.35 percent tax rate.
When asked about the difference between the fiscal cliff and the debt ceiling issues, Wandra said the fiscal cliff bill was a short-term solution, but the debt ceiling remained a long-term issue with Congress.
Wandra said she believes we’ll see major tax reform in the next year, including possible changes to the federal tax code, which she described as the “Bible” of taxes.
Snell elaborated on the changes to the financial processes he and other CPA’s now face.
Snell said 66 rules and regulations are added to the list of financial processes each day, and are left open to forum comments. Snell said as of now, there’s a backlog of 2,000 processes to be gone through.
Snell also mentioned the difficulty in acquiring loans, due in part, he said, to the Wall Street bank bailouts of 2010. Snell said banks were told to find a way to issue less loans and generate more revenue.
“If you wanted to buy a house, for example, your credit rating would now need to be 30 points higher than before,” he said.
Snell also said banks must now disclose balloon payments — large payments due at the end of a mortgage or loan — in order to protect their borrowers.