By Ron Marasco
Put your parachute away. The fiscal cliff deal is done...for now. The question is, how does it affect you?
"The compromise that they came to is actually pretty reasonable," said certified financial planner Scott Schmailzl of Schmailzl Financial Group. "For the most part, tax brackets aren't affected for most of the people."
It affects individuals making more than $400,000 a year by about 4½ percent. It also creates some stability.
"It settled one argument," said Art Sanders, a professor of politics at Drake. "It settled a basic structure of taxes for quite a while."
While we dodged a bullet, we were hit by a gavel. According to the tax policy center, most households would have seen a $3,500 tax increase. Instead, we'll see a $1,250 increase, or about $25 a week. That's because the payroll tax holiday was not renewed. You'll see that as FICA or social security on our paycheck.
"Unfortunately there is no type of planning you can do to get around that," said Schmailzl. "Just you're normal tax planning that you do."
Parents get to keep the $1000 child tax credit. That was set to drop to $500. And you get to continue to write of that $2,500 for college tuition.
Long–term unemployment benefits will continue...for least a year.
And farmers also caught a break.
"Farmers in Iowa were nervous that they were gonad reduce the amount of land that they got to exclude from estate taxes," said Schmailzl. "However, they ended up leaving it at $5 million."
Credits and deductions were also capped for high–income earners. While low–income families dodged cuts in the earned income tax credit.