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Ernst & Young Partner Elda Di Re on the potential tax implications of the fiscal cliff negotiations.
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So the -- continuing to warn that the -- passing congress don't reach a deal which includes the Alternative Minimum Tax.
At least approximately thirty million more Americans will see their tax -- go up.
And our next guest says middle income earners are gonna hit the hardest.
Joining us now other direct a partner at Ernst and young my alma bottoms of budget -- -- thanks to the giants in the AMT.
Is it drives me insane because we're at the same place every year begging for a patch from congress.
My conspiratorial theory is that.
This is just their -- a Christian -- -- to some flat tax system because that's essentially what it is right here yeah absolutely correct tracing the AMT is a different way of calculating attacks taking on hearing come and saying we're happy to give you.
Many of those itemized deductions and have a different right.
But there has been consistently -- exemption amount which requires congress to pass up legislation each year to extend -- -- -- the exemption is not permanent.
In in our tax code.
And right now it X spot they're going back to January 1 2012 so we don't have it right now but do you think they they could potentially let this go I mean coming close -- filling in years we have the -- a little earlier on absolutely in fact the IRS has planned on the patch right at their computer -- program that way.
So we don't get it it will not only impact those people who have to pay the AMT.
It will delay refunds because the -- computers we'll have to be reprogrammed so we absolutely need that patch and we needed quickly at the same time now it as dire as -- all is they could pass the tax.
But it we have to an earlier say January 15 make it retroactive and then -- -- it just delays that preparation process.
That's right so and until.
The IRS and people know whether that patches there you really can't file their return -- get a refund and do anything less about us going over this fiscal -- what happens to my paycheck we know that the Social Security.
-- Social Security will go up as far as your payroll taxes what else happens how collection I don't just -- W four.
Well it depends on your own personal situation so the the change in these Social Security tax will automatically happen in your paycheck but there's a couple of other things that happened to that.
Are really dependent upon your own family situation.
So with you make more than 250000.
You'll have -- You'll have been incrementally.
At higher -- That's unlimited that's -- point 9% that -- Medicare tax essentially goes up that look back into the W four tables well it goes into the W fort tables if you personally make.
More than 200000 once your wages.
Hit 200 your employer will take it.
But if -- married filing jointly and you have grossing come up to 58.
You are subject to that tax but your employer may not know it because they don't know your overall family situation in which case you either have to plan on increasing your withholding through the W four.
Or making quarterly estimated tax yeah that's a great point and I know we have to run I have one fast question you specialize in hedge funds and private equity.
Do you think they're gonna lose that 15% special capital gains treat carried interest yet on the table of spin on the table for a long time probably -- -- happen.
An update I now I know you can't pay attention they're they're -- and thank you so much for being here thank you think Italian Naspers now.
