PHOENIX — Some experts are calling the fiscal cliff, which is less than a month away, “Taxmageddon.”
If Congress and President Obama fail to reach a solution on the budget by the end of the month, tax hikes and big budget cuts automatically kick in for the wealthy.
For example right a gift of up to $5 million dollars can be given without paying a gift tax. That will change if the country goes off the fiscal cliff.
“You could give away $5 million right now but Jan. 1 you’ll be paying tax on $4 million,” said Jason Miller with BMO Private Bank in Scottsdale.
Miller said those would could be affected may want to consider accelerating income into this year.
“As opposed to deferring it so if you have capital gains in stocks or mutual funds it might make sense to realize them this year.
Attorney Harvey Frutkin said there’s no need to panic for taxpayers.
“There will be time to accelerate to deductions that otherwise would be taken next year or postpone income that would be taken this year. I think we’ll have those opportunities,” he said.
Frutkin said most of the potential tax changes will affect the wealthy and he believes a solution will be found before America goes off the so-called fiscal cliff.
The non-partisan Tax Policy Center estimates middle-class families would pay about $2,000 a year more in taxes, or about 4 percent. The top 1 percent of taxpayers would see their tax bills go up around 7 percent, or about $120,000.