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    Payroll tax hike may shrink your paycheck

    8:09 PM, Jan 11, 2013   |    comments
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    LITTLE ROCK, Ark. (KTHV) -- A lot of you got your first paycheck of 2013 Friday, and it will be the last one you get since the last minute fiscal cliff deal. That deal avoided widespread spending cuts and drastic tax increases across the board.

    George Hardin of Little Rock said his paycheck was a little lighter today, thanks to a payroll tax increase. Hardin, along with his partner, are attempting to live the American dream with their three young children, but with less money coming in, Hardin said it's time to have a serious conversation with the family about their financial future.

    "Like tomorrow we're going to be in town. We were going to go take the kids out and do something. Well, that's not going to happen really. We're going to have to go find something free to do. Go to the park," Hardin said.

    The payroll tax break expired with the new year, meaning someone making an annual income of $60,000 will be saying goodbye to about $100 a month--that's $1,200 a year.

    Numbers like that have Hardin re-evaluating his spending.

    "I'm going to start taking lunches to work that's for sure," Hardin added.

    Tax expert Jim Williams with Arkansas Tax Select said there are modifications you can make to your W-4 to lessen the impact every paycheck.

    "Let's say hypothetically someone has a $1,000 refund at the end of the tax year. Ok, if they change their withholding to now, they basically get that $1,000 over a course of a year in order to supplement what is no longer there," Williams explained. "It just means that come tax time they may not have the refund that they're typically used to."

    As for Hardin, he said his family is already making adjustments to their budget.

    "Grocery shopping is going to be done tomorrow. We'll see what happens there.

    The tax hike affects mostly lower income people who will notice the bite out of their paycheck more since they take home less.

    Twitter: @THVMeredith 

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