Many financial advisors are preparing clients for the 3.8 percent tax on investment income that goes into effect January 1, 2013. A recent survey by Nationwide Financial found that 88 percent of affluent investors said they are confident that their advisors will adequately prepare them for the tax hit, though most said they do not plan to meet with their advisors to discuss the matter.
The tax has nothing to do with the current fiscal cliff negotiations or comprehensive tax reform expected in 2013. Rather, it is a part of the 2010 Affordable Care Act designed to help pay for the law's health care and Medicare reform.
The new tax applies to individuals with adjusted gross incomes above $200,000 or couples with AGIs above $250,000. Income from stock sales, dividends, bonds, mutual funds, annuities, interest, loans and home sales may be subject to the tax.
An AdvisorOne article details how some advisors are positioning clients to deal with the new tax.