Falling Off The Fiscal Cliff Could Hit Your Pockets Hard

The back and forth negotiations in Washington moved forward Monday, as Americans worry about what could happen to them if we go off the fiscal cliff. Monday, republicans presented a ten year plan they say makes the cuts needed to avoid tax increases, but the President wants tax cuts to expire for households making more than $250,000.

Taxpayer Dave Pochily is hoping Democrats and Republicans will reach an agreement to avoid going off the fiscal cliff, "if everybody keeps to their side we're going to be in big trouble," said Pochily.

If both sides don't reach an agreement by the end of December millions of Americans will be hit hard come tax time. A lot of the Bush era tax cuts, which were extended in 2010 are set to expire. That includes the payroll tax holiday, "if the average person's making say $50,000 per year 2% of that is $1,000, you're getting $1,000 more in your paycheck," explained CPA David Young, of Young and Company, "but beginning in January, unless that's extending, your paycheck is going to be smaller by two percent." Pochily says that would be a nightmare, "right now we've got two kids in college and that income is going to other things right now, so, if we don't have it, it just makes it that much tighter."

The child tax credit will go down by 50%. Instead of getting $1,000 dollars per child, you'll get $500. The average minimum tax, or AMT will go up, "that alone could cause an upper middle class family to pay $3,500 maybe $4,000 dollars more in AMT alone in 2012, not in 13, but right now when you're filing your 2012 income taxes," said Young, "you could be looking at a big AMT hit."

Taxpayers say they can't afford it, "I don't think that people can afford to pay that much money right now, coming out of their pockets, especially right now during a recession that could take us to a depression," said taxpayer James Sturtevant, "people can't afford to be paying more taxes."