Rising prices with small paychecks is making it very difficult for the families to keep pace with the tight economy. Everyone, especially the young ones, wonders how to deal with shrunken paychecks when the prices have risen and when the desires are many. Mainly the tax, which covers the Social Security, is deducted from the paycheck directly. The tax deduction for the year 2013 has been fixed to a maximum amount of $113,700 and income above this particular amount is exempted from social security taxes.
For those who didn’t pay any taxes in the year 2013 will have to pay $2,274 for the year 2013 which is approximately $40 a week. Because of this, many families are struggling.
If you happen to be one of those families struggling with their shrunken paychecks, then here are a few tips and strategies you can try:-
- If you have never considered changing your withholdings, then think again. It may not change the amount of tax that is required to pay, but will surely help with the tax pressure for the year. Internal Revenue Service’s online withholding calculator helps to calculate the exact number required. To change the withholding, one has to file the form W-4 with the employer. This step generally gives taxpayers a big refund with money in their pocket rather than loaning.
- Many people cut down their retirement savings to keep up with the tax money but surely, this is not a good move. The deduction of the old age saving now might seem a good option but down the road, it will create a mess. So, find any other way to work with the tax amount.
- Recalculate the tax money, as the payroll taxes are not existent anymore from this year. By any chance if you are self-employed and have to pay a considerable amount of tax money, then re-do the calculation before making the first payment in the month of April. Just go by the simple rule like to calculate the extra 2% that is required to pay this year and divide it by four. If the amount of income is above the social security cutoff, then do add an extra $569 to the quarterly estimated payments.
- Just think about the money lost to the payroll taxes and if anyone wants the money for living expenses, then do check on the discretionary expenditures. Cutting the cost by eating out less or not spending a lot on those costly cups of coffee during work can help a lot. Most important is to go a little low on the credit card debt.
