The countdown to the so-called ‘fiscal cliff' continues and with Thanksgiving and Christmas breaks coming for Congress, lawmakers have very few days to get a deal done.
Many financial advisors, like Rusty Peterson with Securian Advisors are preparing their clients for the worst if America goes over the fiscal cliff.
Wall Street has been very uneasy the last few weeks, with investors worried about what will happen if lawmakers in Washington can't get a deal done and automatic spending cuts and tax increases kick in January 1st.
Here are some ways it could affect your finances.
Taxes on capital gains from stocks would go up from their current rate of 15 percent to 20 percent and if you have a household income of at least $250,000 or $200,000 for an individual, tack on an extra 3.8 percent.
Taxes on dividends would jump up to 43.4 percent from 15 percent.
Also, the threshold for the estate tax would lower; meaning your combined assets over $1 million could get an extra tax hit.
"I think that, in and of itself, is going to be more widespread and affect much more people, than the capital gains tax," said Rusty Peterson, financial advisor.
Peterson added that the fiscal cliff is a tax issue, and he typically doesn't advise clients to sell off stocks en masse because of possible tax concerns.