GRAND RAPIDS (WZZM) -- It's the number one topic in the world of finance --the inability of President Obama and lawmakers to reach a deal on the fiscal cliff.
The deadlock is also creating a headache for tax accountants. Some in the accounting business say it's making it nearly impossible for them to do their job at the most important time of the year.
Government leaders have until year's end to figure out how to stave off automatic tax increases and spending cuts. What they will finaly decide -- if anything -- is a big unknown, and that's an issue that has some tax accounts concerned.
"A lot of clients are asking us what we should do, and the problem is thatwe can't give them any definite answers," said Claude Titche III, a certified public accountant with BeeneGarter.
Titchehelps oversee one of the largest accounting firms in the Grand Rapids area. The company has 2,000 clients who are looking for advice for their end-of-year tax planning.
"I was telling people lawmakers aregoing to kick the can down the road, and and we're going to keep everything the same for 2013 like it was for 2012," says Titche. "I'm now sort of backing out on that."
Lawmakers are supposed to reach a deal before they leave Washington for break in mid-December. But that doesn't give taxpayers or accountants a lot of time to plan.
"They might cap interest expense or charitable contributions and so you'd hate to tell a client to don't pay those contributions because next year they're going to be worth more, but then if they're not worth more then we're in trouble," he said.
Whattitche will tell clients -- like the average middle class person making $50,000 a year -- is to plan on seeingyour annual take home pay decrease by $1,000. That's because the FICA payroll tax credit is likely going away.
"If they abolish that, that's going to hurt the hardest. Tax rates will go up a little bit," he said.
His advice as of right now?
"I'm tempted to accelerate income and watch out on the expense side, but I'm not sure because they might be adjusting how much you're deductions are going to be next year as well," he said.
Again, that's a "not sure" in the answer. Only a definite tax law passed by Congress and signed by the President will provide that.
"Right now, we're hedging our bets," he said.
President Obama met Tuesday with several governors in hopes of getting support for his plan, which would raise taxes on the wealthiest two percent of Americans.
Republicans sent their own proposal to the president Monday, which included $1.2 trillion in spending cuts and $800 billion in new tax revenue.
The president says no deal will be reached until Republicans agree to increasing taxes on the wealthy.