THE NEW RULES OF RETIREMENT SAVING • 43
Magic Ball: How Taxes Could Hurt Your Savings If you don’t believe me that taxes are going up, consider one of my clients, Mattie. Mattie owns a catering company. She’s very successful, catering not only weddings and special events but a growing number of corporate lunches and dinners in our commu- nity. A few years ago at tax time, Mattie discovered she owed $1,266 more in taxes than she planned. She didn’t have more income than the year before: profits from her catering company were strong, but flat. And she knew her tax bracket hadn’t changed. There had been no new tax increases announced by Congress. So she was more than a little confused. Her accountant cleared it up for her: In the Affordable Care Act (otherwise known as Obamacare), there was a provision to in-crease the threshold for Social Security taxes. Mattie now owed Social Security taxes on a large part of her income, and, accordingly, her tax bill was higher.
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