POSTED: Tuesday, November 20, 2012 - 5:15pm
UPDATED: Tuesday, November 20, 2012 - 5:19pm
NBC NATIONAL NEWS — Congress is running out of time to reach a compromise that avoids the looming fiscal cliff.
If they don't, the new year will ring in massive tax increases and budget cuts-impacting nearly every American.
In addition to spending reductions, roughly $500 billion in tax cuts would expire.
That would effect everyone's paycheck.
According to the Tax Policy Center someone making $40 to $65,000 dollars a year would pay about $672 dollars in payroll taxes and $1,328 dollars more in federal income taxes per year.
The child tax credit would be cut in half and credits for students would be reduced.
Additionally, more than 30 million Americans could have to pay a tax Congress has traditionally protected them from known as the Alternative Minimum Tax.
Financial advisor Ric Edelman says most Americans don't need to worry about their investments, such as retirement savings in 401Ks, but a small group may want to consider selling certain investments because taxes on capitol gains could increase by five percent.
"Don't sell yet because it might prove unnecessary. But it let's you prepare," he advises.
John Goodman, the president of the National Center for Policy Analysis, says the recession Federal Reserve Chairman Ben Bernanke predicted could cost $2 million people their jobs.
"The weakest sectors will be hit the hardest, and the weakest sectors are the sectors where people don't have very many skills," Goodman notes.
Compounding that, those without work next year could receive less unemployment aid.
It would also be reduced as part of the fiscal cliff's spending cuts.
Economists say uncertainty over the fiscal cliff is already hurting the economy as businesses hold off new investments and hiring until they know what the new year holds.