Social Security Tax Break Puts More Money in Your Wallet - Newschannel 6 Now | Wichita Falls, TX

Social Security Tax Break Puts More Money in Your Wallet

Many Americans will soon be enjoying a bigger paycheck this year.  In the past 6.2 percent of an employee's paycheck went straight to Social Security now that number has gone down to 4.2 percent, a savings of 30 percent.

This is happening because of the Tax Relief, Unemployment Insurance Reauthorization, and the Job Creation Act of 2010.  Some people have already started to see those savings, others will notice it when they get their first check this month.

There's a few words of advice financial expert Gail Cunningham has when it comes to these Social Security savings.

"Don't wake up next year and wonder where all that money went," Cunningham said, she is with the National Foundation for Credit Counseling.

Instead she suggests, plan ahead.

"Look at your own specific financial situation and decide where you are most on thin ice and address that problem," said Cunningham.

The savings will amount to hundreds or even thousands of dollars a year depending
on your income.

For example someone earning $30,000 would see a savings of $50 a month and $600 a year.
While someone earning $100,000 would reap an extra $166 a month and a total of $2,000.

"I would save it, definitely be saving it," said one man.

"I would like to put over some more to get our house paid off," said one Texoma woman.

"Probably saving it.  My daughter will start driving next month so probably save it to help her with gas," said one woman.

For many it was a surprise.  The extra cash is meant to be used as a form of stimulus to encourage spending from the Obama administration, but Gail Cunningham suggests to think before you buy and start paying off those creditors.

"You can use this money to go towards your minimum monthly payments and really power play those creditors and see that balance come down quickly," she said.

For those that are financially stable she says beef up your 401(k) and IRA's or just simply stash the cash.

The Social Security tax break is only for 2011.  Social Security earners will not see a drop in their paychecks.

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