This includes capital gains, dividends, interest payments and, for those who own rental property, net rental income. The tax will apply to individuals with a gross income of $200,000 or more or married couples filing jointly with a combined gross income of $250,000 or more. If you're in the targeted income brackets, talk with your tax and investment advisers about steps you can take this year to prepare for the new tax.
Assess AMT danger
The alternative minimum tax, or AMT, is a continual tax trap for millions of middle-income taxpayers. This parallel tax system was created in 1969 to ensure wealthier taxpayers pay a minimum amount of taxes, primarily by disallowing several common deductions that are claimed under the regular tax system.
But because the AMT is not indexed for inflation, Congress must increase the income levels affected by the alternative tax.
It's possible that tax reform in 2012 could eliminate the AMT, a longtime goal of many lawmakers. But just in case that doesn't happen and you fear you might end up paying the alternative tax, talk with your tax adviser about ways you can limit your AMT exposure.
Giving to charity can help reduce an annual tax bill, but if you have a large estate, gifts also are important estate tax tools. Thanks to the resurrection of the estate tax in 2011, the unified gift tax also returned. This means you can give away $5 million during your lifetime without having to pay the 35 percent gift tax.
There's also an annual amount to note in giving away your estate's assets while you're still around to get thanks. In 2012, you can give up to $13,000 each to as many individuals as you wish without any tax costs to you or your gift recipients.
Evaluate estate tax implications
Speaking of the estate tax, the inevitable meeting of death and taxes will be a hot topic in 2012. If Congress takes no action, the current $5 million estate exclusion will fall to $1 million, and the tax on estates larger than that will be 55 percent on Jan. 1, 2013. If your estate will be larger than $1 million, talk with an estate tax adviser in 2012 about options to reduce any possible larger federal tax bite.
Hire a registered tax pro
The IRS is continuing its efforts to regulate tax preparers. The process began with the registration of return preparers and the issuance of a personal Preparer Tax Identification Number, or PTIN, to each. The IRS is ramping up its effort to hold tax preparers accountable and weed out unscrupulous tax pros, with proposals to fingerprint preparers and, in 2013, require them to pass competency exams. If you hire a tax pro, ask about his or her IRS registration status, along with your usual inquiries to verify the preparer's ability to meet your tax needs.