If you are employed, here is an easy way to save for Christmas

[Virgderon]

The new social security tax break goes into effect this month. Whether you agree with it or not from a political point of view, it offers an opportunity.

Lets say you make $3000 a month. Currently your social security tax rate is 6.2 %, or $186. The new rate is 4.2 %, or $126.

You have $60 more a month without changing anything you are doing now.

Start an ING or Discover savings account online. On payday, have $30 directly deposited into your account.

By the end of November, you will have $660 just for Christmas shopping. ( $60 x11) .

When I get a small raise or tax break like this, I usually waste it. Not this year.

Happy New year everyone!

 

[annsteere]

When does the new rate go into effect?

I love this idea--it fits right in with reorganizing our finances starting Jan 1.

We'll be using it for an emergency or new car fund, not Christmas presents.

THANKS for the heads-up.

 

[My2BabiesLexis&Dill]

I thought I read that the federal tax from our paychecks will be raised. I'll have to see where I found that article. Then too, I could have dreamed it all up. LOL. But I would like a break in my paycheck since I won't be getting any raises for the next 2 years.

 

[Virgderon]

Hi- they extended the Bush era federal tax cuts for 2 more years, so I don't think you will see an increase there.

I know for sure this social security rate thing was approved.

Any accountants or tax experts out there? We'd love to hear from you!

 

[The 4 "Quay"balleros]

From what I understand, the federal tax rates are going to stay the same. The social security rate is going to be lowered 2%. This means approximately if you earn 50K a year, you pay 1K less in social security taxes. I believe this cut replaces Obama's Making Work Pay tax break of the last two years. So technically federal income taxes will go up. But this break was something like $400 single/$800 married, so depending on what you make is whether or not you make out with the new laws. For my family, we should pay about $1200 less than last year(hopefully!)

Happy New Year Everybody!

 

[My2BabiesLexis&Dill]

I found this article on IRS.gov. I see where they did approve the social security tax but the rest of it makes NO sense to me at all. But I'll post a link to what they are saying. LOL.
http://www.irs.gov/newsroom/article/0,,id=232590,00.html?portlet=7

 

[Swimalie]

That will be nice. I'll have to see with my husband's first check the 2nd Monday in Jan what it will amount to. Of course it may all go to waste when he'll find out in March if he's laid off as part of the lovely 10% reduction in force of Fed workers. Nice little Christmas present we were given. 19 people in his office have to go.

 

[ConnieB]

One thing to remember....these changes go into effect for work done after the 1st of the year. So, depending on how your employers pays you, the changes may not show up on your paycheck until late January or even early Februrary.

For instance....if your job pays you monthly, and your payment that you receive in January is actually for work done in December....then you won't see the change until February when the paycheck is for work done in January.

If you're paid twice a month, then the check you receive around the 15th of January will likely be for work you performed the last two weeks of December...so your change may not show up until the end of January.

Confused yet, lol. If so, don't really worry about it....just realize that if you don't see a change in your next paycheck....keep watching it for a couple weeks until your particular pay cycle reaches January and the changes show up on your stub.

 

[StephMK]

That will be nice. I'll have to see with my husband's first check the 2nd Monday in Jan what it will amount to. Of course it may all go to waste when he'll find out in March if he's laid off as part of the lovely 10% reduction in force of Fed workers. Nice little Christmas present we were given. 19 people in his office have to go.

We're in the same boat but not gov office. DH was told the Fri.before Christmas that cuts will come in Feb or March. Not sure why they picked that timing but happy holidays. And they changed payroll to bi-weekly so check schedule is later this month and throws off the budget.

 

[LadyBeBop]

Some civil service employees won't get the tax break.

You have to be paying into Social Security to get the break. If you're paying into another fund (e.g. Civil Service Retirement), you'll be paying the full rate, and you won't have the 2% tax cut.

That really hurts some federal employees (about 20% of feds). No pay raises for the next two years. As mentioned, this replaces the Making Work Pay Credit, so that's an additional $400-$800 tax increase. But they don't get the SS tax cut.

Full disclosure. I'm a federal employee. However, I pay into SS, so I do benefit from the SS tax cut.

 

[Marionnette]

The new social security tax break goes into effect this month. Whether you agree with it or not from a political point of view, it offers an opportunity.

Lets say you make $3000 a month. Currently your social security tax rate is 6.2 %, or $186. The new rate is 4.2 %, or $126.

You have $60 more a month without changing anything you are doing now.

Start an ING or Discover savings account online. On payday, have $30 directly deposited into your account.

By the end of November, you will have $660 just for Christmas shopping. ( $60 x11) .

When I get a small raise or tax break like this, I usually waste it. Not this year.

Happy New year everyone!

My husband and I decided to invest the difference in our retirement accounts. We figure that the money would have been meant to go toward retirement originally. Its just nice that we get to retain control of it instead of the social security administration.

 

[casndan]

I pay into PERA (public employees retirement association) so it won't benefit me. I got excited for a moment until I remembered

 

[StitchBuddy]

I hadn't heard that. It won't affect my pay, I'm a teacher. But, I am surprised, since they are always saying SS is in trouble. How will they fund it?? Just wondering, because it will affect my husband, he pays into SS.

 

[DawnM]

Dh will get extra, which will go into our emergency fund. Our goal is to get the fund up to 12 months of living expenses if at all possible!

Christmas next year may be even more frugal than this year!

Dawn

 

[mdrob214]

I would advise that you take your 2% and put it in your IRA or other retirement account. If you're not maxed out on your 401K, that's an excellent place for it. And if your employer matches, then you could be saving even more.

You can still save an additional amount for Christmas--out of sight, out of mind!

 

[wendypooh]

I would advise that you take your 2% and put it in your IRA or other retirement account. If you're not maxed out on your 401K, that's an excellent place for it. And if your employer matches, then you could be saving even more.

You can still save an additional amount for Christmas--out of sight, out of mind!

This is exactly what we're going to do!!!!

 

[Donnainnj]

This is what we were thinking to.
Donna

My husband and I decided to invest the difference in our retirement accounts. We figure that the money would have been meant to go toward retirement originally. Its just nice that we get to retain control of it instead of the social security administration.

 

[j's m]

I found this article on IRS.gov. I see where they did approve the social security tax but the rest of it makes NO sense to me at all. But I'll post a link to what they are saying. LOL.
http://www.irs.gov/newsroom/article/0,,id=232590,00.html?portlet=7

Thanks for the link, I'm glad I read this. I swear it was originally supposed to also lower 2% for the employer, too. But, of course, not so. I was hoping we would save some money as an employer.

 

[Virgderon]

Putting it directly into your 401k is also good advice. I really need to build up an emergency savings account, so that is my goal. I have a Christmas Club already. I was just suggesting a Christmas Club for people who struggle at that time of the year.

I should have said it this way:

Are you aware that you are going to have extra money in your paycheck starting mid January or so? Find a way to save it instead of letting it fritter away .

 

[diznee25]

Awesome! In the article I read on MSNBC, it used an example that if you make $50,000 per year it would be like getting a .50 cent raise per hour.

So with my DH's and my paychecks combined that should roughly be about an extra $75 per month! Just what we need to keep up motivated to pay down credit card debt, yea!


Happy New Year!


diznee25