Despite being a “taxman” for the past 22 years, I find my role in today’s economic climate making me feel more like a “weatherman” assessing a coming storm. The weatherman talks about the huge storm coming and for people to take cover and prepare for the worst. Who listens to the weatherman anyway? The storm sometimes seems so abstract that most people just cannot fathom what potential it carries, and generally believe it will hit somewhere else.

The IRS has been releasing more information about the new taxes in the Affordable Healthcare Act that will be implemented in 2013. Just like the “weatherman,” the tax professional should be reviewing their client’s situation to see if this coming storm will affect them, where, and how hard: preparedness mitigates damage, and saves resources.

The role of the tax professional has changed over the years, and the Affordable Healthcare Act just reinforces the need for your tax professional to be more focused on tax planning for immediate consequences, as well as making adjustments for coming changes in the future.

On the immediate horizon is the new 3.8% Medicare surcharge tax on net investment income for taxpayers with income over $200,000 / $250,000 (single / married filing jointly). One of the key planning hurdles was waiting for what the IRS definition of “net investment income”, which includes most passive income activities. Although this additional tax will not hit the majority of taxpayers, poor planning may make it a trap for some. One very real area is anyone considering doing a Roth Conversion (I rarely advise) after December 31, 2012, which has the potential to make lower income folks subject to the new tax by raising their adjusted gross income (AGI) above the threshold.

Higher income taxpayers will be subject to an additional 0.9% Medicare tax on their wage income over $200,000. If their AGI surpasses the thresholds above, their net investment income will be subject to the 3.8% described previously, and will subject interest, dividend, capital gains, royalties, rental income, as well as any other passive activity income to the additional tax.

The clairvoyant tax planner may also see many other changes on the horizon that taxpayers should mitigate. My senses tell me that we will see fringe benefits like employer-paid healthcare became taxable in the future, as these tax-free benefits become a larger portion of employee compensation. There will also be a coming debate on taxation between those that pay for insurance after-tax from government exchanges versus those that get it from their employer tax-free. The haven of the Subchapter S Corporation will likely end, or be modified so that all income is subject to self-employment tax. As personal tax rates climb, and both political parties talk about reducing corporate rates, partnerships and S Corporation may find the traditional C-Corporation more advantageous. Moreover, if conditions continue to align, it may even challenge the taboo of individual taxpayers holding their rental real estate (passive activity) in a corporation (active trade), which is generally frowned upon because it makes it difficult to refinance property and take tax-free distributions.

Yes, tax planning is the future emphasis on the tax professional. I hope that we do better than the weatherman, who only gets it right 50% of the time. At this point though, with most taxpayers experiencing declining wages and less disposable income, tax planning may be low-hanging fruit to put more dollars back into the taxpayer pocket.

Taxpayers should find an experienced Enrolled Agent in their area that focuses on tax planning and taxpayer representation. Enrolled Agents are the only federally licensed tax professionals with unlimited rights to practice before the IRS and focus solely on taxation. Attorneys and CPAs are licensed to practice by their state only, while Enrolled Agents are licensed in all 50 states.