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How the fiscal cliff will affect you

NEED TO KNOW
  • Fiscal cliff talks resume this weekend as deadline nears.
  • President Obama says he is "modestly optimistic" about a deal.

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How the fiscal cliff will affect you

The threat of the fiscal cliff has been buzzing for weeks, but what will happen if lawmakers can't agree on a plan? Jennifer Westhoven takes a look at how the fiscal cliff could affect you.

  • For a family that makes $20,000 to $30,000 a year: Westhoven explains they used to get a refund, but now they will owe $1,400 dollars more a year-- that's a nearly 10 percent increase. 
  • For a middle-income family making $75,000 a year: Couples in this bracket can expect to see a $2,000 spike in taxes, a four percent increase.
  • For a high-income couple making $350,000 a year: Westhoven says individuals can brace for impact with a nearly $14,000 jump in money due. Their tax rate is up 20 percent.

When will you feel the squeeze on your wallet? Westhoven explains—you’ll feel most of it in April 2014 when you pay your 2013 taxes. However, the immediate impact will be felt by people in the lower and middle income brackets. "Your paychecks could immediately get knocked if there's no change in what could happen in the payroll tax," she notes. She adds a lot of businesses have already slowed down in fear of the cliff.

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