Americans have been inundated for weeks now with talk of the looming “fiscal cliff” and many people are confused about what that means.
But San Antonio financial advisor Brooklynn Chandler Willy said what most people need to understand is that if Congress fails to act it means more money out of their wallets.
"Basically, it will impact every single American,” Chandler Willy said. “I don't care how much you make in income."
Chandler Willy is a certified tax coach and the president and CEO of Texas Financial Advisory. She said if Congress fails to extend at least some of the tax cuts scheduled to expire next week, average Americans will pay significantly more taxes next year.
She said they will start feeling the increases by the second or third paycheck.
"On average, you're going to pay more than $3,400 to Uncle Sam next year," she said. "Of course, the more income you make the more taxes you'll be paying in."
She said the Internal Revenue Service is also waiting to see what Congress does on deductions and tax brackets.
"Our income tax brackets are changing,” Chandler Willy said. “No longer will we have a 10 percent tax bracket. It's bumping up to a 15 percent tax bracket."
She said 20 million people would also be paying higher Medicare premiums.
What’s more, Chandler Willy said, the shopping sprees people are used to going on with their refund checks could be delayed.
She said the refund checks that pay for those economy-stimulating purchases will be pushed back due to the uncertainty of IRS calculations.
She said people should not worry, but they should find someone competent to advise them.
"You need to find a financial confidant, if you will, and someone you feel comfortable with,” Chandler Willy said. “There are enough of us out there that you can interview and find someone that fits you."
She said that is especially important if people are in retirement or retiring soon.
Chandler Willy said there will also be changes in estate and inheritance taxes and that the time to transfer wealth, up to $13,000 to another individual, may be a good idea before January 1st.