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What You Should Know About Taxes

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    Ernst & Young National Tax Department co-leader Michael Mundaca discusses concerns over taxes.

  • Duration 3:58
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Hello it's not often a presidential candidate wins the White House by promising -- all tax increase how about that way to win votes.

President Obama's message attacks and his does seem to be crucial part of the campaign and actually helped him when his second term last night so -- -- question for those of us that.

Aren't really keen on this tax hike what's your tax is gonna look like come April Michelman -- -- co leader of the national tax apartment for Ernst and young.

Diana from around the model and former assistant secretary -- the Treasury Department under President Obama joins us now.

The prospects for com.

-- of tax reform which is divided congress are pretty months slim to none right now right.

I'd say we have the elections now we know who the players are going to be.

We know the positions that were laid out in the campaign there's going to be a process for tax reform.

I'm optimistic we'll see some advance on this weather will see a deal we'll have to wait so I think the most the biggest thing people are worried about an -- are these fiscal cliff tax increases right yet the bush tax cuts about a hundred million Americans will be affected.

Of course the estate tax.

There's an Obama wants to increase capital teens and of course there's the 250000.

Dollar break point for families out there are those concerns again.

Those are concerns in the fiscal cliff you're you're right that is the big issue that has to be face now.

We have very short period of time before -- little over the cliff.

There has to be compromise -- does have to be some coming together on -- -- using that 250000.

Now could be one of the compromises or is that a done deal.

I don't anything he's done at this point we have the elections we have the players now.

The elections gonna have consequences I don't think any position -- often you know we're seeing dividend -- sell off today because again is talking about sending the dividend tax back to your ordinary income tax rate.

That affects a slew of people you know seniors in particular.

That's right another thing to keep in mind or call as part the health care act right here's an additional three point 8% tax on dividends for high earners.

That looks like it's coming into place no matter what happens in -- fiscal cliff just stood and hires to estate tax coming back probably looking at around a 45%.

So what should people do between now basically in the end of the year.

One you have to monitor what's happening there's going to be a lot of fast moving developments.

You have to stay on top of them you have to know we're gonna sell the stocks to try to lock in the gains you have now with -- lower rates.

Dividends could be coming these are the issues people have to look to people also to -- really concerns now of course about April.

April though.

Really it's your 2011 rates so April's not are concerned our concern is going to be April 2000.

Thirteen excuse me 2014 really right wanting to keep in mind though that will be next year issue of it's not address the so called Alternative Minimum Tax patch.

That expired.

That is not in place for this year if that's not extended before the end of the year or before the returns are due in April.

That will hit the returns that are filed in April 2013 one of the things we've heard with a fiscal cliff is.

Dealing with the spending and a tax hikes.

It's just too much boggles the little brains so maybe deal -- this pending first.

Because the tax stuff they could always make retroactive to -- want.

-- -- -- -- -- -- -- -- ceased to step process I do think we'll get past the fiscal cliff I think the consequences are so dire people come together we'll get some temporary extension.

And then I think we'll see the addressing of the tax and a spending issue but I do think we'll see those together I don't know that either side will move.

On either of those without part of that package addressing the other.

Yeah could be it it and it could affect the payroll tax if we don't see our -- all.

That part of the discussion but not necessarily going to be addressed we have not seen a groundswell of support for extending that 2% cut now we haven't seen a download of support for months and.

-- might -- thank you for being here thanks for having me.

Just adds to the uncertainty oh my gosh I figuring out taxes is already so difficult that doesn't seem like it's gonna get any more simplify.

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