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Lawmakers are Down to the Wire with no Solid Solution in Sight

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With much on the line it seems like little progress is being made as the deadline closes in.
According to the Congressional Budget Office, if congress doesn't act the combines tax hikes and spending cuts could result in a recession.

Analysts say the higher taxes that will come with the fiscal cliff would give the average American about $1,500 less to spend next year.

Financial Advisor for Edward Jones, Sander Ludeman says, "If we do go off the fiscal cliff you should be able to look at some of your first paychecks in January 2013 and that's when you're going to see the effect on you as a family."

The average person would see an increase in their personal income tax rate and the loss of a two percent reduction in the payroll tax.

Usually Liberty Tax Services don't see their phones start ringing off the hook like this for a few months yet. But that hasn't been the case as of late.
Enrolled Agent, Glenice Karnes says, "We do get a lot of phone calls. I have customers ready now to get their taxes done, but can I finalize them, no."

On top of that higher taxes if a compromise isn't reached. Karnes says, "People are going to either pay more taxes or not get as much credit so they won't get the refunds they are used to getting and they're going to owe more taxes in the long run.

Financial Advisor at Edward Jones, Sander Ludeman says if you fear higher taxes a Roth IRA for 2012 can still be added if you're eligible up until April 15th. And when dealing with investments, his advice- don't panic.

Sander Ludeman says, "Stay diversified and balanced and it's very important to not take an emotional reaction and do something drastic."

Ludeman adds don't disrupt your long term plans due to short-terms uncertainty if your quality investments are re-balanced it could help in the unpredictable bumpy road ahead.

Some general tax changes for 2012 include the elimination of Bush Tax rates going back to the Clinton era rates.