With Congress and the President still figuring out how to fend off the so-called “fiscal cliff” – the fact that government spending cuts are set to go into effect at the end of the year and Bush-era tax cuts will be expiring, the outcome is still uncertain as to what happens next with taxes. But tax experts can help you figure out how to handle these changes.
While major changes to the tax policy might be out of taxpayers’ hands, there are a few steps Americans can take to prepare for the potential changes. First, all taxpayers who deal with paid professionals should talk to them now and NOT wait! Ask questions like: Will my tax rate likely go up? Will deductions that I normally take no longer be available? If so, are there ways to mitigate, or at least prepare for, some of these effects?
Investors need to think about the possibility of different taxes on small businesses, dividends, and estate-tax changes. Lawmakers have even thought about limiting the deduction that homeowners can take for their mortgage interest, a change that would affect many homeowners, especially the ones with large mortgages.
For those who file their own taxes, there’s not much to do other than keep an eye on what’s going on. Once lawmakers come to an agreement, the IRS will release documents that help taxpayers figure out how the changes apply to them. But at this uncertain time, taxpayers need to be aware that whatever their circumstances in life, their taxes may go up and, and they’ll need to adjust their spending and saving because of it. However, people who file their own taxes may want to seriously consider seeking a tax professional to assist with all these changes and find deductions they never knew they had available to them to offset the tax hikes they potentially face.
The good news is that lawmakers on both sides of the aisle are motivated to reach an agreement and avert this “fiscal cliff” – the potential economic impact of allowing the tax increases and spending cuts to occur could have a potentially devastating effect on many taxpayers.
To find out what you can do now to get yourself ready for the 2013 Tax Season, speak with a Beaton Accounting tax representative for professional advice on your taxes! Call today for a FREE consultation: 631-921-6894.
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