*Hidden Taxes You're Probably Paying

From Forbes.com I just thought you might want to be aware of these taxes!


Payroll Tax

Employers and employees split the cost of payroll taxes--the Social Security, Medicare and miscellaneous taxes you see listed as "FICA" on your paycheck. But many economists argue that you're paid less so that your employer can compensate for tax it pays just to keep you on the payroll. If you earn $97,500 or less, this could mean a 15.3% reduction in your take-home pay. (Half in the payroll tax you pay, half in your employer's share.) According to the Tax Policy Center, about two-thirds of all wage earners fork over more to Uncle Sam in payroll taxes (including the employer's share) than in income taxes.

Alternative Minimum Tax

The IRS' National Taxpayer Advocate calls the AMT "the poster child for tax law complexity." And because it's not indexed to inflation, it's ensnaring more of the middle class--particularly families with lots of kids and second mortgages. The AMT affected 4 million taxpayers in 2006, but this number could balloon to 23 million this year if Congress does not fix the problem, as it has done in years past. Why don't lawmakers just eliminate the AMT? Because it's expected to bring in about $800 billion in government revenue over the next 10 years.

Sources: Tax Policy Center, Internal Revenue Service

Social Security Tax

For your entire working life, Uncle Sam takes a chunk of your pay to help pay for Social Security. But when you start receiving a Social Security paycheck, you still may be taxed on some of this income--sometimes as much as 85% of it. If your total income plus half of your Social Security benefits exceeds $34,000 ($44,000 for couples filing jointly), you get stuck paying the 85% rate. Others, who earn less, either have 50% or 0% of their Social Security taxed. Like the AMT, these figures aren't adjusted for inflation, meaning an increasing number of people are being ensnared by the tax. Some price for retiring!

Sources: IRS, Tax Policy Center